Automation Software Stocks Q3 Teardown: Microsoft (NASDAQ:MSFT) Vs. The Rest

As the earnings season craze comes to a close, here’s a look back at some of the most exciting (and some not so) results from the third quarter. Today we’ll look at automation software stocks, starting with Microsoft (NASDAQ:MSFT).

The whole purpose of software is to automate tasks to increase productivity. Today, innovative new software techniques, often involving AI and machine learning, are finally enabling automation that has evolved from simple one- or two-step workflows to more complex processes that are integral to enterprises. The result is an increasing demand for modern automation software.

The seven automation 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 in line.

While some automation software stocks have done slightly better than others, they have collectively fallen. On average, share prices have fallen 3.3% since the last earnings results.

Microsoft (NASDAQ:MSFT), originally called “Micro-soft” for microcomputer software, is a global technology company that develops software, cloud services, devices and AI solutions for consumers, businesses and organizations around the world when it was founded in 1975.

Microsoft reported revenue of $77.67 billion, up 18.4% year over year. This print exceeded analyst expectations by 2.9%. Overall, it was a very strong quarter for the company with a narrow gain in analyst revenue estimates as the gain in Intelligent Cloud and Business Services trumped the miss in Personal Computing and a solid gain in analyst revenue estimates.

“Our planet-scale cloud and AI factory, together with Copilots in high-value domains, will enable broad distribution and impact in the real world,” said Satya Nadella, chairman and CEO of Microsoft.

Microsoft’s total revenue

The stock has fallen 11.1% since reporting and is currently trading at $483.36.

Read why we think Microsoft is one of the best automation software companies; our full report is free.

With a Center-out Business Architecture approach that transcends organizational silos, Pegasystems (NASDAQ:PEGA) develops software that helps organizations automate workflows and use artificial intelligence to improve customer experiences and business processes.

Pegasystems reported revenue of $381.4 million, up 17.3% year over year, beating analyst expectations by 8.5%. The company had a stunning quarter with a solid profit in analyst expectations and an impressive gain in analyst EBITDA estimates.

Pegasystems achieved the highest analyst profit forecast among its peers. The market seems pleased with the results, as the stock is up 4.7% since reporting. It is currently trading at $59.73.

Is Now the Time to Buy Pegasystems? See our full analysis of the revenue results here. This is free for active Edge members.

Born from the idea that machines should understand human speech as naturally as humans, SoundHound AI (NASDAQ:SOUN) develops speech recognition and conversational intelligence technology that allows companies to integrate voice assistants into their products and services.

SoundHound AI reported revenue of $42.05 million, up 67.6% year over year, beating analyst expectations by 2.7%. Still, it was a weaker quarter as analyst EBITDA estimates were significantly missed, as were analyst billing estimates.

As expected, the stock has fallen 30.8% since the results and is currently trading at $9.94.

Read our full analysis of SoundHound AI’s results here.

Starting with robotic process automation (RPA) and evolving into a comprehensive automation powerhouse, UiPath (NYSE:PATH) offers an AI-powered business automation platform that allows organizations to create software robots that mimic human actions to streamline repetitive tasks and processes.

UiPath reported revenue of $411.1 million, up 15.9% year over year. This print exceeded analyst expectations by 4.7%. That aside, it was a satisfying quarter as it also delivered an impressive return on analyst EBITDA estimates, but a significant miss on analyst billing estimates.

The stock is up 8.8% since reporting and is currently trading at $16.38.

Read our full, actionable report on UiPath here, it’s free for active Edge members.

Built on a single code base that processes more than 4 billion workflow transactions every day, ServiceNow (NYSE:NOW) offers a cloud-based platform that helps organizations automate and digitize workflows across departments, from IT and HR to customer service and security.

ServiceNow reported revenue of $3.41 billion, up 21.8% year over year. This result exceeded analyst expectations by 1.4%. Let’s take a step back: It was a satisfying quarter, as it also delivered a solid gain from analyst EBITDA estimates, but a significant miss from analyst billing estimates.

ServiceNow performed the weakest among its peers, according to analyst estimates. The stock has fallen 16.2% since reporting and is currently trading at $152.85.

Read our full, actionable report on ServiceNow here. It’s free for active Edge members.

As a result of the Fed’s rate hikes in 2022 and 2023, inflation has fallen from its frothy post-pandemic levels. Overall price growth for goods and services has been trending toward the Fed’s 2% target lately, which is good news. The higher interest rates that combated inflation also did not slow economic activity enough to catalyze a recession. A soft landing so far. This, combined with recent interest rate cuts (half a percent in September 2024 and a quarter of a percent in November 2024) has led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the US presidential election in early November, sending major indices to record highs in the week after the election. Still, debates remain about the health of the economy and the impact of potential rate cuts and corporate tax cuts, leaving a lot of uncertainty around 2025.

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