Vertical Software Stocks Q4 Highlights: Bentley (NASDAQ:BSY)

The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Bentley (NASDAQ:BSY) and the rest of the vertical software stocks fared in Q4.

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 Q4; on average, revenues beat analyst consensus estimates by 1.4%, while next quarter's revenue guidance was 1.6% below consensus. Inflation progressed towards the Fed's 2% goal at the end of 2023, leading to strong stock market performance. The start of 2024 has been a bumpier ride, as the market switches between optimism and pessimism around rate cuts due to mixed inflation data, and while some of the vertical software stocks have fared somewhat better than others, they collectively declined, with share prices falling 3.7% 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 $310.6 million, up 8.3% year on year, falling short of analyst expectations by 0.9%. It was a mixed quarter for the company, with an impressive beat of analysts' earnings estimates but a narrow miss of analysts' revenue estimates.

CEO Greg Bentley said, “Our financial results for 23Q4 and the full year underscore the sustained combination of auspicious infrastructure engineering markets and the strength of our operations. I enthusiastically congratulate COO Nicholas Cumins and our teams for delivering another year of unsurpassed performance, resourcefully reaching fully 100% of our new business target while also clearing our established hurdle of 100 basis points in annual operating margin improvement. Most notably, we achieved ARR growth (year‑over‑year constant currency business performance, including programmatic acquisitions) of 12.5%, and excluding China, as our purposeful transitions from direct subscriptions there gain traction, we achieved a high-water mark of 13.5%.

Bentley delivered the weakest performance against analyst estimates of the whole group. The stock is down 0.2% since the results and currently trades at $52.42.

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

Best Q4: 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 $238.3 million, up 20.3% year on year, outperforming analyst expectations by 6.4%. It was a strong quarter for the company, with a solid beat of analysts' revenue estimates and a significant improvement in its gross margin.

Manhattan Associates delivered the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. The stock is up 1.1% since the results and currently trades at $226.34.

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

Weakest Q4: 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 $240.9 million, up 3.6% year on year, falling short of analyst expectations by 0.4%. It was a slower quarter for the company, with full-year revenue guidance missing analysts' expectations and underwhelming revenue guidance for the next quarter.

Guidewire had the slowest revenue growth and weakest full-year guidance update in the group. The stock is down 7.9% since the results and currently trades at $107.64.

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 $226.2 million, up 8.7% year on year, in line with analyst expectations. It was a decent quarter for the company, with management forecasting robust growth.

The stock is down 7.6% since the results and currently trades at $64.49.

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

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