As the earnings season craze comes to a close, here’s a look back at some of the most exciting (and some not so) results from the third quarter. Today we’ll look at vertical software stocks, starting with Q2 Holdings (NYSE:).
Software (ETR 🙂 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 fifteen vertical software stocks we track reported a strong third quarter. As a group, revenues exceeded analyst consensus expectations by 3.4%, while revenue expectations for the next quarter were 0.7% above.
Fortunately, vertical software stocks have performed well, with share prices up an average of 12.4% since the last earnings results.
Second Quarter Investments (NYSE:QTWO)
Founded in 2004 by Hank Seale, Q2 (NYSE:QTWO) provides software-as-a-service that enables small banks to offer online banking and consumer lending to their customers.
Holdings reported second-quarter revenue of $175 million, up 12.9% year over year. This print exceeded analyst expectations by 0.9%. Overall, it was a very strong quarter for the company, with an impressive return on analyst expectations and a solid improvement in analyst EBITDA estimates.
“We delivered solid booking success across our businesses in the third quarter, highlighted by six Enterprise and Tier 1 deals, including three with the Top 50 U.S. banks,” said Matt Flake, chairman and CEO of the second quarter.
Interestingly, the stock is up 14.8% since reporting and is currently trading at $103.82.
Is Now the Time to Buy Q2 Holdings? Find out by reading the original article on StockStory, it’s free.
Best Q3: Upstart (NASDAQ:
Upstart (NASDAQ:UPST), founded by the former head of Google’s (NASDAQ:) business operations, is an AI-powered lending platform that powers banking and consumer lending.
Upstart reported revenue of $162.1 million, up 20.5% year over year, and exceeded analyst expectations by 7.9%. The company had a stunning quarter with an impressive showing of analyst EBITDA estimates and next quarter revenue expectations exceeding analyst expectations.
The market seems pleased with the results, as the stock is up 53.1% since reporting. It is currently trading at $84.90.
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 $5.61 billion, up 11.1% year over year, beating analyst expectations by 1.2%. Still, it was a slower quarter as revenue expectations for the following quarter fell slightly short of analyst expectations and analyst expectations were not met.
As expected, the stock has fallen 15.5% since the results and is currently trading at $464.45.
Veeva Systems (NYSE:NYSE:)
Built on top of Salesforce as one of the first vertically focused cloud platforms, Veeva (NYSE:VEEV) provides data and customer relationship management (CRM) software for organizations in the life sciences industry.
Veeva Systems reported revenue of $699.2 million, up 13.4% year over year. This print exceeded analyst expectations by 2.2%. It was a very strong quarter as it also delivered an impressive showing of analyst EBITDA estimates and full-year earnings per share expectations, which exceeded analyst expectations.
The stock is down 1.2% since reporting and is currently trading at $228.78.
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 figure exceeded analyst expectations by 2.9%. Overall, it was a very strong quarter as it also showed solid improvement in analyst expectations and EBITDA estimates.
The stock is up 20.8% since reporting and is currently trading at $305.55.
Market update
The Fed’s rate hikes in 2022 and 2023 successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without the economy entering a recession, pointing to a soft landing. This stability, combined with recent interest rate cuts (0.5% in September 2024 and 0.25% in November 2024), has led to a strong year for the stock market in 2024. Markets continued to rise following Donald Trump’s presidential victory in November , with major indices reaching equity market levels. record highs in the days after the election. Still, questions remain about the direction of economic policy as potential corporate tax rates and changes increase uncertainty heading into 2025.
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This content was originally published on Stock Story
