3028

Q2 Rundown: Unity (NYSE:U) Vs Other Vertical Software Stocks


Jabin Bastian /
2021/10/07 7:43 am EDT
Add to Watchlist

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 Unity (NYSE:U).

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 8 vertical software stocks we track reported a a solid Q2; on average, revenues beat analyst consensus estimates by 8.51%, while on average next quarter revenue guidance was 8.91% above consensus. The market rewarded the results with the average return the day after earnings coming in at 9.17%.

Unity (NYSE:U)

Founded in 2004 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 $273.5 million, up 48.4% year on year, beating analyst expectations by 12.6%. It was a very strong quarter for the company, with an impressive beat of analyst estimates and an exceptional revenue growth.

“At Unity, our goal is to provide creators with the best tools to succeed as RT3D creators,” said John Riccitiello, President and Chief Executive Officer, Unity.

Unity Total Revenue

The stock is up 21.1% since the results and currently trades at $132.50.

We think Unity is a good business, but is it a buy today? Read our full report here, it's free.

Best Q2: Upstart (NASDAQ:UPST)

Founded in 2012, Upstart (NASDAQ:UPST) is an AI-powered lending platform that helps banks better evaluate the risk of lending money to a person and provide loans to more customers.

Upstart reported revenues of $193.9 million, up more than 10x year on year (due to the COVID dip), beating analyst expectations by 22.9%. It was an impressive quarter for the company, with a stunning beat of analyst estimates and an exceptional revenue growth.

Upstart Total Revenue

Upstart pulled off the strongest analyst estimates beat, fastest revenue growth, and highest full year guidance raise among its peers. The stock is up an incredible 126.2% since the results and currently trades at $315.31.

Is now the time to buy Upstart? Access our full analysis of the earnings results here, it's free.

Weakest Q2: 2U (NASDAQ:TWOU)

Founded in 2008 by John Katzman and Jeremy Johnson, 2U provides software for universities and colleges to deliver online degree programs and courses.

2U reported revenues of $237.2 million, up 29.8% year on year, beating analyst expectations by 1.54%. It was a weaker quarter for the company, with a strong top line growth but a full year guidance missing analysts' expectations.

The stock is down 27.73% since the results and currently trades at $33.86.

Read our full analysis of 2U's results here.

nCino (NASDAQ:NCNO)

Founded in 2011 in North Carolina, nCino makes cloud-based operating systems for banks and provides that software as a service.

nCino reported revenues of $66.5 million, up 36.4% year on year, beating analyst expectations by 4.39%. It was a strong quarter for the company, with a significant improvement in gross margin.

The stock is up 10.9% since the results and currently trades at $70.81.

Read our full, actionable report on nCino here, it's free.

Adobe (NASDAQ:ADBE)

One of the most well-known Silicon Valley software companies around, Adobe (ADBE) is a leading provider of software as service in the digital design and document management space.

Adobe reported revenues of $3.93 billion, up 22% year on year, in line with analyst expectations. It was a solid quarter for the company, with a positive outlook for the next quarter.

The stock is down 11.06% since the results and currently trades at $578.50.

Read our full, actionable report on Adobe here, it's free.

The author has no position in any of the stocks mentioned