The end of earnings season is always a good time to take a step back and look at who’s excelling (and who’s not so good). Let’s take a look at how automation software stocks fared in the third quarter, starting with ServiceNow (NYSE:NOW).
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 six automation software stocks we track reported a mixed third quarter. As a group, revenues exceeded analyst consensus expectations by 1.2%, while revenue expectations for the next quarter were in line.
In light of this news, the companies’ stock prices have remained stable. On average, they are relatively unchanged since the last earnings results.
ServiceNow (NYSE:NOW) was founded by Fred Luddy, who coded the company’s first prototype on a flight from San Francisco to London. It is a software provider that helps companies automate IT, HR and customer service workflows.
ServiceNow reported revenue of $2.80 billion, up 22.2% year over year. This print exceeded analyst expectations by 1.9%. Overall, it was a satisfactory quarter for the company with solid improvement in current analyst estimates of remaining performance commitments, but slowing growth among major customers.
“ServiceNow has raised our full-year expectations based on our third quarter results, once again exceeding expectations,” said Bill McDermott, Chairman and CEO of ServiceNow.
Total ServiceNow revenue
ServiceNow achieved the fastest revenue growth of the entire group. The company added 32 enterprise customers paying more than $1 million annually, bringing the total to 2,020. Unsurprisingly, the stock is up 17.5% since reporting and is currently trading at $1,066.
Is Now the Time to Buy ServiceNow? See our full analysis of earnings results here. It’s free.
Microsoft (NASDAQ:MSFT), short for microcomputer software, is the world’s largest software vendor with its Windows operating system, Office suite and cloud computing services.
Microsoft reported revenue of $65.59 billion, up 16% year over year, beating analyst expectations by 1.6%. The company had a strong quarter with a solid improvement in analysts’ operating profit expectations and a miss in analysts’ revenue expectations.
Microsoft’s total revenue
However, the results were likely priced into the stock as it has been trading sideways since reporting. Shares are currently trading at $433.
Is Now the Time to Buy Microsoft? See our full analysis of earnings results here. It’s free.
Founded in 1983 by Alan Trefler, Pegasystems (NASDAQ:PEGA) provides a software-as-a-service platform for automating and optimizing customer service and engagement workflows.
Pegasystems reported revenue of $325.1 million, down 2.9% year over year and falling 0.8% short of analyst expectations. It was a disappointing quarter as analysts’ EBITDA and billing estimates were significantly missed.
Pegasystems had the weakest performance compared to analyst estimates and the slowest revenue growth in the group. Interestingly, the stock is up 35% since the results and is currently trading at $94.11.
Read our full analysis of Pegasystems’ results here.
Appian (NASDAQ:APPN), founded by Matt Calkins and his three friends from an apartment in Northern Virginia, sells a software platform that lets users build applications without using much code, allowing them to create new software faster.
Appian reported revenue of $154.1 million, up 12.4% year over year. This print exceeded analyst expectations by 1.3%. Zooming out, it was a satisfying quarter as it also delivered an impressive return on analyst EBITDA estimates, but EBITDA guidance for the next quarter fell significantly short of analyst expectations.
Appian had the weakest full-year guidance update among its peers. The stock has fallen 16.3% since reporting and is currently trading at $33.95.
Read our full, actionable report on Appian here. It’s free.
Founded in 2005 in Romania as a technology outsourcing company, UiPath (NYSE:PATH) makes software that helps companies automate repetitive computing tasks.
UiPath reported revenue of $354.7 million, up 8.8% year over year. This result exceeded analyst expectations by 2%. Let’s take a step back: It was a mixed quarter, as it also delivered a solid gain from analyst EBITDA estimates, but a significant miss from analyst billing estimates.
UiPath delivered the highest analyst estimates among its peers. The stock has fallen 15.8% since reporting and is currently trading at $12.58.
Read our full, actionable report on UiPath here. It’s free.
Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs and is moving closer to the 2% target. This disinflation has occurred without serious consequences for economic growth, indicating a soft landing success. The stock market boomed in 2024, boosted by recent interest rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump’s victory in the presidential election in November, pushing the indices were pushed to historic highs. Nevertheless, the outlook for 2025 remains clouded by the pace and magnitude of future interest rate cuts and by potential changes to trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.
Do you want to invest in winners with rock-solid fundamentals? Check out our Top 5 High Quality Compounder Stocks and add them to your watchlist. These companies are primed for growth regardless of the political or macroeconomic environment.
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