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Q1 Earnings Outperformers: Veeva Systems (NYSE:VEEV) And The Rest Of The Vertical Software Stocks


Anthony Lee /
2024/06/20 6:24 am EDT

As the Q1 earnings season wraps, let's dig into this quarter's best and worst performers in the vertical software industry, including Veeva Systems (NYSE:VEEV) 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, some have very specific needs. As a result, vertical software, which addresses industry-specific workflows, is growing and fueled by the pressures to improve productivity, whether it be for a life sciences, education, or banking company.

The 16 vertical software stocks we track reported a slower Q1; on average, revenues beat analyst consensus estimates by 0.9%. while next quarter's revenue guidance was 2.3% below consensus. Stocks--especially those trading at higher multiples--had a strong end of 2023, but 2024 has seen periods of volatility. Mixed signals about inflation have led to uncertainty around rate cuts, and vertical software stocks have held roughly steady amidst all this, with share prices up 0% on average since the previous earnings results.

Veeva Systems (NYSE:VEEV)

Built on top of Salesforce as one of the first vertical-focused cloud platforms, Veeva (NYSE:VEEV) provides data and customer relationship management (CRM) software for organizations in the life sciences industry.

Veeva Systems reported revenues of $650.3 million, up 23.6% year on year, topping analysts' expectations by 1.3%. It was a weak quarter for the company, with full-year revenue guidance missing analysts' expectations and a miss of analysts' billings estimates.

Veeva Systems Total Revenue

The stock is down 7.8% since the results and currently trades at $179.02.

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

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 $1.08 billion, up 31.3% year on year, outperforming analysts' expectations by 3.3%. It was a very strong quarter for the company, with a significant improvement in its gross margin and a solid beat of analysts' billings estimates.

Toast Total Revenue

Toast pulled off the fastest revenue growth among its peers. The stock is up 1.5% since the results and currently trades at $24.1.

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

Weakest Q1: ANSYS (NASDAQ:ANSS)

Used to help design the Mars Rover, Ansys (NASDAQ:ANSS) offers a software-as-a-service platform that enables simulation for engineering and design.

ANSYS reported revenues of $466.6 million, down 8.4% year on year, falling short of analysts' expectations by 15.9%. It was a weak quarter for the company, with a decline in its gross margin and a miss of analysts' average contract value estimates.

ANSYS had the weakest performance against analyst estimates in the group. The stock is up 1.2% since the results and currently trades at $325.13.

Read our full analysis of ANSYS's results here.

Procore Technologies (NYSE:PCOR)

Used to manage the multi-year expansion of the Panama Canal that began in 2007, Procore Technologies (NYSE:PCOR) offers a software-as-service project, finance and quality management platform for the construction industry.

Procore Technologies reported revenues of $269.4 million, up 26.2% year on year, surpassing analysts' expectations by 2.5%. It was a mixed quarter for the company, with a miss of analysts' billings estimates and decelerating customer growth.

The company added 231 customers to reach a total of 16,598. The stock is down 4.9% since the results and currently trades at $64.92.

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

Upstart (NASDAQ:UPST)

Founded by the former head of Google's enterprise business Dave Girouard, 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 $127.8 million, up 24.2% year on year, surpassing analysts' expectations by 2.4%. It was a slower quarter for the company, with underwhelming revenue guidance for the next quarter and a decline in its gross margin.

The stock is down 8.6% since the results and currently trades at $22.36.

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

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