As we look back at design software stocks’ third-quarter gains, we examine this quarter’s best and worst performers, including Unity (NYSE:) and its peers.
The demand for rich, interactive 2D, 3D, VR and AR experiences is growing, and while the ubiquitous metaverse may still be more of a buzzword than a real thing, the demand for the tools to create these experiences is real. are games, 3D tours or interactive films.
The six design software stocks we track reported a strong third quarter. As a group, revenues exceeded analyst consensus expectations by 4.4%, while revenue expectations for the next quarter were 2.9% below that.
In light of this news, the companies’ stock prices have remained stable. On average, they are relatively unchanged since the last earnings results.
Unit (NYSE:U)
Founded as a game studio by three friends in an apartment in Copenhagen, 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. generate.
Unity reported revenue of $446.5 million, down 18% year over year. This print exceeded analyst expectations by 4.3%. Overall, it was a mixed quarter for the company with an impressive performance against analyst expectations, but EBITDA guidance for the next quarter fell short of analyst expectations.
Unity delivered the slowest revenue growth and the weakest full-year guidance update of the entire group. Unsurprisingly, the stock has fallen 16.2% since reporting and is currently trading at $18.64.
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Best Third Quarter: ANSYS (NASDAQ:ANSS)
Used to help design the Mars Rover, Ansys (NASDAQ:) provides a software-as-a-service platform that enables simulation for engineering and design.
ANSYS reported revenues of $601.9 million, up 31.2% year over year, and exceeded analyst expectations by 14.9%. The company had a stunning quarter with an impressive return to analyst EBITDA estimates and a solid improvement to analysts’ annual contract value estimates.
ANSYS achieved the highest earnings estimates among analysts and the fastest revenue growth among its peers. The market seems pleased with the results, as the stock is up 2% since reporting. It is currently trading at $339.99.
Weakest third quarter: Adobe (NASDAQ:
Adobe (NASDAQ:ADBE), one of Silicon Valley’s best-known software companies, is a leading provider of software as a service in digital design and document management.
Adobe reported revenue of $5.41 billion, up 10.6% year over year, beating analyst expectations by 0.6%. Still, it was a slower quarter as revenue expectations for the next quarter fell slightly short of analyst expectations.
Adobe had the weakest performance compared to analyst estimates in the group. As expected, the stock has fallen 10.4% since the results and is currently trading at $526.10.
Cadence (NASDAQ:CDNS)
With the name chosen to capture the idea of a repeating pattern or rhythm in electronic design, Cadence Design Systems (NASDAQ:) offers a software-as-a-service platform for semiconductor engineering and design.
Cadence reported revenue of $1.22 billion, up 18.8% year over year. This print exceeded analyst expectations by 2.9%. Overall, it was a very strong quarter as it also delivered a solid increase in analyst expectations and an impressive increase in analyst EBITDA estimates.
The stock is up 18.2% since reporting and is currently trading at $298.77.
Procore (NYSE:PCOR)
Used to manage the multi-year expansion of the Panama Canal, which began in 2007, Procore (NYSE:PCOR) provides a software-as-service project, financing and quality management platform for the construction industry.
Procore reported revenue of $295.9 million, up 19.4% year over year. This print exceeded analyst expectations by 2.9%. It was a strong quarter as it also delivered an impressive return on analyst EBITDA estimates and accelerated customer growth.
Procore scored the highest full-year guidance increase among its peers. The company added 225 customers, reaching a total of 16,975. The stock is up 14.3% since reporting and is currently trading at $71.61.
Market update
The Fed’s rate hikes in 2022 and 2023 successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without the economy entering a recession, pointing to a soft landing. This stability, combined with recent interest rate cuts (0.5% in September 2024 and 0.25% in November 2024), has led to a strong year for the stock market in 2024. Markets continued to rise following Donald Trump’s presidential victory in November , with major indices reaching equity market levels. record highs in the days after the election. Still, questions remain about the direction of economic policy as potential corporate tax rates and changes increase uncertainty heading into 2025.
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This content was originally published on Stock Story
