The end of an earnings season can be a good time to discover new stocks and assess how companies are coping with the current business environment. Let’s take a look at how ANSYS (NASDAQ:ANSS) and the rest of the design software stocks fared in the second quarter.
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 seven design software stocks we track reported a slower second quarter. As a group, revenues exceeded analyst consensus expectations by 1.9%, while revenue expectations for the next quarter were in line.
After much tension, the Federal Reserve lowered its policy interest rate by 50 basis points (half a percent) in September 2024. This marks the central bank’s first easing of monetary policy since 2020 and the end of its most targeted anti-inflation campaign since the 1980s. Inflation started to spike in 2021 following the COVID-19 crisis due to a confluence of factors such as supply chain disruptions, labor shortages and stimulus spending. While CPI (inflation) numbers have been positive recently, employment measures have raised some concerns. Going forward, markets will debate whether this rate cut (and more potential rate cuts in 2024 and 2025) is the perfect timing to support the economy, or whether it’s a bit too late for a macro that’s already too much cooled down.
Fortunately, design software stocks have proven resilient, with share prices up an average of 5.8% since the last earnings results.
ANSYS (NASDAQ:ANSS)
Used to help design the Mars Rover, Ansys (NASDAQ:ANSS) provides a software-as-a-service platform that enables simulation for engineering and design.
ANSYS reported revenue of $594.1 million, up 19.6% year over year. This print exceeded analyst expectations by 6.9%. Despite the revenue increase, it was still a slower quarter for the company, with analysts’ average contract value estimates underwhelming and a decline in gross margin.
ANSYS scored the highest analyst estimates of the entire group. Unsurprisingly, the stock is up 2.2% since reporting and is currently trading at $320.45.
Read our full report on ANSYS here. It’s free.
Best Q2: Cadence (NASDAQ:CDNS)
With the name chosen to capture the idea of a repeating pattern or rhythm in electronic design, Cadence Design Systems (NASDAQ:CDNS) offers a software-as-a-service platform for semiconductor engineering and design.
Cadence reported revenue of $1.06 billion, up 8.6% year over year, beating analyst expectations by 1.7%. The company outperformed its peers, but unfortunately it was a mixed quarter with a solid improvement in analyst expectations but a decline in gross margin.
Although it has had a good quarter compared to its peers, the market seems dissatisfied with the results as the stock is down 5.8% since reporting. It is currently trading at $270.70.
Is Now the Time to Buy Cadence? See our full analysis of earnings results here. It’s free.
Weakest Quarter 2: PTC (NASDAQ:PTC)
PTC’s (NASDAQ:PTC) software-as-service platform, used in the design of the Airbus A380 and Boeing 787 Dreamliner commercial aircraft, helps engineers and designers create and test products before they go into production.
PTC reported revenue of $518.6 million, down 4.4% year over year, falling 2.8% short of analyst expectations. It was a weaker quarter as analyst expectations were not met and gross margin fell.
PTC delivered the weakest performance against analyst estimates and the weakest full-year forecast update in the group. The stock is flat since the results and is currently trading at $179.14.
Read our full analysis of PTC’s results here.
Autodesk (NASDAQ:ADSK)
Autodesk (NASDAQ:ADSK), founded in 1982 by John Walker and becoming one of the industry’s behemoths, makes computer-aided design (CAD) software for engineering, construction and architecture companies.
Autodesk reported revenue of $1.51 billion, up 11.9% year over year. This result exceeded analyst expectations by 1.5%. Let’s take a step back: It was a slower quarter as analyst billings and annual recurring revenue (ARR) estimates were missed.
Autodesk achieved the highest full-year expectation increase among its peers. The stock is up 7% since reporting and is currently trading at $276.01.
Read our full, actionable report on Autodesk here. It’s free.
Procore (NYSE:PCOR)
Used to manage the multi-year expansion of the Panama Canal, which began in 2007, Procore (NYSE:PCOR) provides a software-as-service project, financing and quality management platform for the construction industry.
Procore reported revenue of $284.3 million, up 24.4% year over year. This figure exceeded analyst expectations by 3.3%. Let’s take a step back: It was a mixed quarter, as it also delivered a solid improvement in analysts’ ARR (annual recurring revenue) estimates, but customer growth slowed.
Procore achieved the fastest turnover growth among its peers. The company added 152 customers, reaching a total of 16,750. The stock has fallen 9.1% since reporting and is currently trading at $61.11.
Read our full, actionable report on Procore here. It’s free.
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