The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s have a look at how the vertical software stocks have fared in Q1, starting with Toast (NYSE:TOST).
Software is eating the world, and while a large number of solutions such as project management or video conferencing software can be useful to a wide array of industries, there are industries that have very specific needs. Whether it is life-sciences, education or banking, the demand for so called vertical software, addressing industry specific workflows, is growing, fueled by the pressures on improving productivity and quality of offerings.
The 11 vertical software stocks we track reported a mixed Q1; on average, revenues beat analyst consensus estimates by 2.53%, while on average next quarter revenue guidance was 2.08% under consensus. The whole tech sector has been facing a sell-off since late last year, but vertical software stocks held their ground better than others, with share price down 3.18% since earnings, on average.
Best Q1: Toast (NYSE:TOST)
Founded by three MIT engineers at a local Cambridge bar, Toast (NYSE:TOST) provides integrated point of sale (POS) hardware, software, and payments solutions for restaurants.
Toast reported revenues of $535 million, up 52% year on year, beating analyst expectations by 9.07%. It was an incredible quarter for the company, with a significant improvement in gross margin and a very optimistic guidance for the next quarter.
“Toast delivered a strong first quarter, coming in well ahead of expectations across the board and adding a record number of net new locations to our platform as we continue to lead restaurants into a new digital era of hospitality,” said Chris Comparato, CEO, Toast.
Toast pulled off the strongest analyst estimates beat and highest full year guidance raise of the whole group. The stock is down 5.32% since the results and currently trades at $13.50.
Is now the time to buy Toast? Access our full analysis of the earnings results here, it's free.
Founded in 2011 in North Carolina, nCino (NASDAQ:NCNO) makes cloud-based operating systems for banks and provides that software as a service.
nCino reported revenues of $94.2 million, up 51% year on year, beating analyst expectations by 3.05%. It was a solid quarter for the company, with an exceptional revenue growth and a strong sales guidance for the next quarter.
The stock is up 0.9% since the results and currently trades at $32.22.
Is now the time to buy nCino? Access our full analysis of the earnings results here, it's free.
Weakest Q1: Unity (NYSE:U)
Started as a game studio by three friends in a Copenhagen apartment, Unity (NYSE:U) is a software as a service platform that makes it easier to develop and monetize new games and other visual digital experiences.
Unity reported revenues of $320.1 million, up 36.3% year on year, missing analyst expectations by 0.31%. It was a weak quarter for the company, with revenue guidance for both the next quarter and the full year below analysts' estimates.
Unity had the weakest performance against analyst estimates in the group. The company added 31 enterprise customers paying more than $100,000 annually to a total of 1,083. The stock is down 22.2% since the results and currently trades at $37.38.
Founded in 1982 by John Walker and growing into one of the industry's behemoths, Autodesk (NASDAQ:ADSK) makes computer-aided design (CAD) software for engineering, construction, and architecture companies.
Autodesk reported revenues of $1.17 billion, up 18.2% year on year, beating analyst expectations by 2.06%. It was a mixed quarter for the company, with a decent beat of analyst estimates but a full year guidance missing analysts' expectations.
The stock is down 8.7% since the results and currently trades at $174.94.
One of the most well-known Silicon Valley software companies around, Adobe (NASDAQ:ADBE) is a leading provider of software as service in the digital design and document management space.
Adobe reported revenues of $4.38 billion, up 14.3% year on year, in line with analyst expectations. It was a weak quarter for the company, with revenue guidance for both the next quarter and the full year below analysts' estimates.
The stock is up 0.79% since the results and currently trades at $368.80.
The author has no position in any of the stocks mentioned