As earnings season draws to a close, we take a closer look at this quarter’s best and worst performers in the automation software sector, including UiPath (NYSE:PATH) and its peers.
The whole point 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 is graduated from simple one- or two-step workflows to more complex processes that are an integral part of enterprises. The result is a growing demand for modern automation software.
The 5 automation software stocks we follow reported a satisfying second quarter. As a group, revenues beat analysts’ consensus estimates by 3.3%, while revenue forecasts for the next quarter were in line.
In the big picture, the Federal Reserve has a dual mandate: inflation and employment. The former was very hot in 2021 and 2022 but has cooled recently toward the central bank’s 2% target, prompting the Fed to cut its policy rate by 50 bps (half a percent) in September 2024. With recent employment data suggesting the U.S. economy could be faltering, markets will be assessing whether this rate cut and future ones (the Fed has signaled more to come in 2024 and 2025) are the right steps at the right time or too little, too late for a macro that has already cooled.
UiPath (NYSE:PATH)
UiPath (NYSE:PATH) was founded in 2005 in Romania as a technology outsourcing company. The company makes software that enables businesses to automate repetitive computer tasks.
UiPath reported revenue of $316.3 million, up 10.1% year-over-year. This print beat analysts’ expectations by 4.1%. Overall, it was a strong quarter for the company, impressively beating analysts’ billings estimates and delivering a full-year revenue forecast that beat analysts’ expectations.
“We are pleased with our second quarter results, with ARR growing 19 percent year-over-year. This is a testament to the team’s improved execution and the compelling value our AI-based automation platform delivers to our customers,” said Daniel Dines, founder and CEO of UiPath.
UiPath posted the largest annual guidance increase but had the slowest revenue growth of the group. However, investor expectations were likely higher than Wall Street’s published forecasts, leading some to hope for even better results (analysts’ consensus estimates are those of big banks and consulting firms, not the investors who make buy and sell decisions). The stock is down 1.3% since the report, currently trading at $12.57.
Is now the time to buy UiPath? Check out our full earnings analysis here, it’s free.
Best Q2: Pegasystems (NASDAQ:PEGA)
Pegasystems (NASDAQ:PEGA), founded by Alan Trefler in 1983, provides a software-as-a-service platform to automate and optimize workflows across customer service and engagement.
Pegasystems reported revenue of $351.2 million, up 17.7% year over year, beating analyst expectations by 8.1%. The company had a stunning quarter, impressively beating analyst billings estimates and improving gross margin.
Pegasystems topped analyst estimates among its peers. The market seems pleased with the results, as the stock is up 8.4% since the report. It is currently trading at $66.25.
Is now the time to buy Pegasystems? Check out our full earnings analysis here, it’s free.
Weakest Q2: Appian (NASDAQ:APPN)
Appian (NASDAQ:APPN) was founded by Matt Calkins and three friends out of an apartment in Northern Virginia. The company sells a software platform that lets users build applications without using a lot of code, allowing them to create new software faster.
Appian reported revenue of $146.5 million, up 14.7% year over year, beating analysts’ expectations by 2.5%. Still, it was a softer quarter, as it reported a miss on analysts’ billings estimates and its full-year revenue forecast missed analysts’ expectations.
Appian delivered the weakest full-year guidance update of the group. As expected, the stock has fallen 9.4% since the results and is currently trading at $33.51.
Read our full analysis of Appian’s results here.
ServiceNow (NYSE:NOW)
ServiceNow (NYSE:NOW) was founded by Fred Luddy, who wrote the code for the company’s first prototype on a flight from San Francisco to London. The company offers a software-as-a-service platform that enables companies to become more efficient by automating workflows across IT, HR and customer service.
ServiceNow reported revenue of $2.63 billion, up 22.2% year-over-year. This print was in line with analyst expectations. Overall, it was a strong quarter, as it also recorded accelerating growth in large customers and a solid beat on analyst billings estimates.
ServiceNow posted the fastest revenue growth, but underperformed analysts’ estimates of its peers. The company added 55 enterprise customers paying more than $1 million annually, bringing its total to 1,988. The stock has risen 23.8% since the report, currently trading at $905.44.
Read our full, actionable report on ServiceNow here. It’s free.
Jamf (NASDAQ:JAMF)
Jamf (NASDAQ:JAMF) was founded in 2002 by Zach Halmstad and Chip Pearson, just as Apple was beginning to dominate the personal computer market. The company provides software that helps businesses manage Apple devices such as Macs, iPads and iPhones.
Jamf reported revenue of $153 million, up 13.3% year-over-year. This result met analyst expectations. Other than that, it was a strong quarter as it also registered a decent beat on analysts’ ARR (annual recurring revenue) estimates, but missed on analysts’ billings estimates.
The stock has risen 9.9% since the report and is currently trading at $17.95.
Read our full, actionable report on Jamf here. It’s free.
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