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 Q2, 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 12 vertical software stocks we track reported a weaker Q2; on average, revenues missed analyst consensus estimates by 0.53%, while on average next quarter revenue guidance was 3.23% under consensus. Investors abandoned cash burning companies since high interest rates will make it harder to raise capital and vertical software stocks have not been spared, with share prices down 22.1% since the previous earnings results, on average.
Best Q2: 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 $675 million, up 58.9% year on year, beating analyst expectations by 4.22%. It was an impressive quarter for the company, with a very optimistic guidance for the next quarter and an exceptional revenue growth.
"Toast had another great quarter, sustaining our operating momentum with a record number of net new locations and strong revenue growth, both of which highlight the power of our industry leading digital platform for restaurants. We continue to balance disciplined investments to enhance our platform and drive sustained growth, with a commitment to increasing efficiency, which was evident in our healthy Adjusted EBITDA margin improvement in the second quarter,” said Toast CEO, Chris Comparato.
Toast pulled off the strongest analyst estimates beat and fastest revenue growth of the whole group. The stock is up 14.1% since the results and currently trades at $20.70.
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 $99.6 million, up 49.7% year on year, beating analyst expectations by 2.17%. It was a strong quarter for the company, with an exceptional revenue growth and a meaningful improvement in gross margin.
The stock is up 5.8% since the results and currently trades at $31.07.
Is now the time to buy nCino? Access our full analysis of the earnings results here, it's free.
Slowest Q2: 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 $297 million, up 8.58% year on year, missing analyst expectations by 0.67%. It was a weak quarter for the company, with guidance for both the next quarter and the full year missing analysts' expectations. Unity previously announced that it has entered into an agreement to merge with ironSource.
The stock is down 36.2% since the results and currently trades at $31.95.
Read our full analysis of Unity's results here.
Founded by Noah Glass, who wanted to get a cup of coffee faster on his way to work, Olo (NYSE:OLO) provides restaurants and food retailers with software to manage food orders and delivery.
Olo reported revenues of $45.6 million, up 27% year on year, missing analyst expectations by 0.5%. It was a weak quarter for the company, with revenue guidance for both the next quarter and the full year missing analysts' expectations.
The stock is down 36.8% since the results and currently trades at $8.23.
Read our full, actionable report on Olo here, it's free.
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 $1.23 billion, up 16.7% year on year, in line with analyst expectations. It was a mixed quarter for the company, with an optimistic revenue guidance for the next quarter but slow revenue growth.
The stock is down 5.23% since the results and currently trades at $203.01.
Read our full, actionable report on Autodesk here, it's free.
The author has no position in any of the stocks mentioned