Q3 Rundown: Bentley (NASDAQ:BSY) Vs Other Vertical Software Stocks

The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how the vertical software stocks have fared in Q3, starting with Bentley (NASDAQ:BSY).

Software is eating the world, and while a large number of solutions such as project management or video conferencing software can be useful to a wide array of industries, some have very specific needs. As a result, vertical software, which addresses industry-specific workflows, is growing and fueled by the pressures to improve productivity, whether it be for a life sciences, education, or banking company.

The 4 vertical software stocks we track reported a mixed Q3; on average, revenues beat analyst consensus estimates by 2.5% while next quarter's revenue guidance was 4.5% below consensus. Investors abandoned cash-burning companies to buy stocks with higher margins of safety, but vertical software stocks held their ground better than others, with the share prices up 12.6% on average since the previous earnings results.

Bentley (NASDAQ:BSY)

Founded by brothers Keith and Barry Bentley, Bentley Systems (NASDAQ:BSY) offers a software-as-a-service platform that addresses the lifecycle of infrastructure projects such as road networks, tunnel systems, and wastewater facilities.

Bentley reported revenues of $306.6 million, up 14.3% year on year, topping analyst expectations by 2.3%. It was a solid quarter for the company, with a decent beat of analysts' revenue estimates and an improvement in its gross margin.

CEO Greg Bentley said, “Our operating results this quarter demonstrate the sustainability of our more broadly balanced growth contributors. Year-over-year ARR growth (business performance in constant currency) remained strong at 12.5% despite fewer calendar workdays and an upsurge in perpetual license purchases. Continuing growth drivers include the Infrastructure Investment and Jobs Act in the U.S., expansion of E365 as our enterprise accounts accelerate going digital, and Virtuosity’s momentum in penetrating small and medium-sized business prospects.

The stock is up 2.1% since the results and currently trades at $49.

Is now the time to buy Bentley? Access our full analysis of the earnings results here, it's free.

Best Q3: Manhattan Associates (NASDAQ:MANH)

Boasting major consumer staples and pharmaceutical companies as clients, Manhattan Associates (NASDAQ:MANH) offers a software-as-service platform that helps customers manage their supply chains.

Manhattan Associates reported revenues of $238.4 million, up 20.4% year on year, outperforming analyst expectations by 5.4%. It was a very strong quarter for the company, with a solid beat of analysts' revenue estimates and full-year revenue guidance beating analysts' expectations.

Manhattan Associates scored the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. The stock is up 14% since the results and currently trades at $216.24.

Is now the time to buy Manhattan Associates? Access our full analysis of the earnings results here, it's free.

Weakest Q3: Guidewire (NYSE:GWRE)

Founded by two individuals involved in the development of leading procurement software Ariba, Guidewire (NYSE:GWRE) offers insurance companies a software-as-a-service platform to help sell their products and manage their workflows.

Guidewire reported revenues of $207.4 million, up 6.2% year on year, exceeding analyst expectations by 2.9%. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and a decline in its gross margin.

Guidewire had the weakest full-year guidance update in the group. The stock is up 12.8% since the results and currently trades at $111.42.

Read our full analysis of Guidewire'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 enables users to control their security systems and smart home appliances from a single app.

Alarm.com reported revenues of $221.9 million, up 2.6% year on year, falling short of analyst expectations by 0.7%. It was a weaker quarter for the company, with a miss of analysts' revenue estimates.

Alarm.com had the weakest performance against analyst estimates and slowest revenue growth among its peers. The stock is up 21.4% since the results and currently trades at $62.41.

Read our full, actionable report on Alarm.com here, it's free.

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The author has no position in any of the stocks mentioned