To wrap up the second quarter results, we look at the numbers and key takeaways for the software vertical stocks, including Guidewire (NYSE:GWRE) and its peers.
Software is eating the world, and while a wide range of solutions, such as project management or videoconferencing software, can be useful for a wide range of industries, some have very specific needs. As a result, the software vertical, which addresses industry-specific workflows, is growing, fueled by pressure to improve productivity, whether in a life sciences, education or banking company.
The four vertical software stocks we track reported a very strong second quarter. As a group, revenues exceeded analyst consensus expectations by 2.7%, while revenue expectations for the next quarter were 7.5% above.
The Fed cut its policy rate by 50 basis points (half a percent) in September 2024, the first in about four years. This marks the end of the most targeted anti-inflation campaign since the 1980s. While the CPI (inflation) numbers have been supportive lately, the employment measures have turned out to be almost worrisome. Markets will assess whether the timing of this rate cut (and more potential ones in 2024 and 2025) is ideal to support the economy or a bit too late for a macro that has already cooled too much.
Fortunately, vertical software stocks have performed well, with share prices up an average of 14.5% since the last earnings results.
Best Second Quarter: Guidewire (NYSE:GWRE)
Guidewire (NYSE:GWRE), founded by two individuals involved in the development of leading purchasing software Ariba, provides insurance companies with a software-as-a-service platform to help sell their products and manage their workflows.
Guidewire reported revenue of $291.5 million, up 8% year over year. This print exceeded analyst expectations by 2.7%. Overall, it was an exceptional quarter for the company, with an impressive improvement in analyst expectations and a significant improvement in gross margin.
“We ended the year with record fourth quarter sales activity and fully accelerated ARR growth of 19%,” said Mike Rosenbaum, CEO of Guidewire.
Guidewire achieved the highest full-year expected increase of the entire group. Unsurprisingly, the stock is up 30.8% since reporting and is currently trading at $188.19.
Is Now the Time to Buy Guidewire? See our full analysis of earnings results here. It’s free.
Manhattan Associates (NASDAQ:MANH)
Manhattan Associates (NASDAQ:MANH) serves major consumer goods and pharmaceutical companies and offers a software-as-service platform that helps customers manage their supply chains.
Manhattan Associates reported revenue of $265.3 million, up 14.8% year over year, beating analyst expectations by 3.5%. The company had an exceptional quarter with full-year revenue guidance that exceeded analyst expectations and a significant improvement in gross margin.
Manhattan Associates delivered the highest analyst estimates and the fastest revenue growth among its peers. The market seems pleased with the results, as the stock is up 33.4% since reporting. It is currently trading at $301.40.
Is Now the Time to Buy Manhattan Associates? See our full analysis of earnings results here. It’s free.
Bentley (NASDAQ:BSY)
Bentley Systems (NASDAQ:BSY), founded by brothers Keith and Barry Bentley, offers a software-as-a-service platform that focuses on the lifecycle of infrastructure projects such as road networks, tunnel systems and wastewater facilities.
Bentley reported revenue of $330.3 million, up 11.3% year over year, beating analyst expectations by 1.6%. Still, it was a mixed quarter as analysts’ ARR (annual recurring revenue) estimates were missed.
Bentley had the weakest performance compared to analyst estimates in the group. Interestingly, the stock is up 11.6% since the results and is currently trading at $49.99.
Read our full analysis of Bentley’s results here.
Alarm.com (NASDAQ:ALRM)
Founded in 2000 as a business unit within MicroStrategy, Alarm.com (NASDAQ:ALRM) is a software-as-a-service platform that allows users to control their security systems and smart home appliances from a single app.
Alarm.com reported revenue of $233.8 million, up 4.4% year over year. This figure exceeded analyst expectations by 2.9%. It was an exceptional quarter as full-year revenue expectations exceeded and solidly exceeded analyst expectations.
Alarm.com had the slowest revenue growth among its competitors. The stock has fallen 17.6% since reporting and is currently trading at $54.03.
Read our full, actionable report on Alarm.com here. It’s free.
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