Wrapping up Q4 earnings, we look at the numbers and key takeaways for the vertical software stocks, including Unity (NYSE:U) and its peers.
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 mixed Q4; on average, revenues beat analyst consensus estimates by 4.86%, while on average next quarter revenue guidance was 2.18% above consensus. Tech stocks have had a rocky start in 2022 and while some of the vertical software stocks have fared somewhat better, they have not been spared, with share price declining 13.6% since earnings, on average.
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 $315.8 million, up 43.3% year on year, beating analyst expectations by 6.81%. It was a mixed quarter for the company, with an exceptional revenue growth but an underwhelming guidance for the next quarter.
“Unity’s strong fourth-quarter and full-year results were driven by exceptional execution and innovation by the Unity teams,” said John Riccitiello, President and Chief Executive Officer, Unity.
The stock is up 3.54% since the results and currently trades at $95.70.
Is now the time to buy Unity? Access our full analysis of the earnings results here, it's free.
Best Q4: Doximity (NYSE:DOCS)
Founded in 2010 and named for a combination of “docs” and “proximity”, Doximity (NYSE: DOCS) is the leading professional network for U.S. medical professionals.
Doximity reported revenues of $97.8 million, up 66.7% year on year, beating analyst expectations by 13.4%. It was a very strong quarter for the company, with an impressive beat of analyst estimates and an exceptional revenue growth.
The stock is up 2.34% since the results and currently trades at $50.97.
Is now the time to buy Doximity? Access our full analysis of the earnings results here, it's free.
Weakest Q4: 2U (NASDAQ:TWOU)
Originally named 2tor after the founder's dog Tor, 2U (NASDAQ:TWOU) provides software for universities and colleges to deliver online degree programs and courses.
2U reported revenues of $243.6 million, up 13.1% year on year, in line with analyst expectations. It was a weak quarter for the company, with full year guidance missing analysts' expectations.
2U had the weakest full year guidance update in the group. The stock is down 27.6% since the results and currently trades at $12.99.
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 $39.9 million, up 30.8% year on year, beating analyst expectations by 2.2%. It was a slower quarter for the company, with a decline in gross margin and an underwhelming revenue guidance for the next quarter.
The stock is down 7.43% since the results and currently trades at $12.58.
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 $512 million, up 111% year on year, beating analyst expectations by 4.93%. It was a a very strong quarter for the company, with an exceptional revenue growth and guidance for the next year above expectations.
The stock is down 31.2% since the results and currently trades at $19.32.
The author has no position in any of the stocks mentioned