To wrap up the third quarter earnings results, we look at the numbers and key takeaways for the design software stocks, including PTC (NASDAQ:) 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.
While some design software stocks have done slightly better than others, they have collectively fallen. On average, share prices have fallen 2.2% since the last earnings results.
PTC (NASDAQ:PTC)
PTC’s (NASDAQ:PTC) software-as-service platform is used to design the Airbus A380 and Boeing (NYSE:) 787 Dreamliner commercial aircraft, helping engineers and designers create and test products before they go into production .
PTC reported revenue of $626.5 million, up 14.6% year over year. This print exceeded analyst expectations by 1%. Despite the revenue increase, it was still a mixed quarter for the company, with management forecasting accelerating growth but earnings expectations for the next quarter significantly exceeding analyst expectations.
“In fiscal 2024, we once again delivered solid ARR and cash flow, with year-over-year ARR growth in the low double digits and cash flow growth of more than 20%. We have a differentiated strategy that leverages our unique product development portfolio to help companies accelerate their time-to-market and cope with increasing complexity. It is an exciting time as our products are at the epicenter of business transformation for our customers,” said Neil Barua, President and CEO of PTC.
Unsurprisingly, the stock is down 4.4% since reporting and is currently trading at $189.24.
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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 showing of analyst EBITDA estimates and annual contract value estimates.
ANSYS scored the highest earnings forecast among analysts and the fastest revenue growth among its peers. However, the results were likely priced into the stock as it has been trading sideways since reporting. Shares are currently trading at $334.71.
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 15.2% since the results and is currently trading at $497.59.
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 result exceeded analyst expectations by 2.9%. It was a very strong quarter as it also showed solid improvement in analyst expectations and EBITDA estimates.
The stock is up 15.3% since reporting and is currently trading at $291.42.
Unit (NYSE:NYSE:)
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 number exceeded analyst expectations by 4.3%. More broadly, it was a satisfactory quarter as it also delivered a solid improvement in analyst expectations, but EBITDA guidance for the next quarter fell short of analyst expectations.
Unity had the slowest revenue growth and the weakest full-year guidance update among its peers. The stock has fallen 19.5% since reporting and is currently trading at $17.91.
Market update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady downward trend, returning to the 2% sweet spot. Fortunately (miraculously for some) all this tightening hasn’t sent the economy into recession, so here we are, cautiously celebrating a soft landing. The icing on the cake? Recent interest rate cuts (half a point in September, a quarter in November) have kept equity markets roiling in 2024, especially after Trump’s victory in November lit a fire under the major indices and sent them to record highs. There’s still plenty to think about, though: tariffs, corporate tax cuts and what 2025 could mean for the economy.
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This content was originally published on Stock Story
