Reflecting On Vertical Software Stocks’ Q4 Earnings: Guidewire (NYSE:GWRE)

Wrapping up Q4 earnings, we look at the numbers and key takeaways for the vertical software stocks, including Guidewire (NYSE:GWRE) and its peers.

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. Stocks--especially those trading at higher multiples--had a strong end of 2023, but 2024 has seen periods of volatility. Mixed signals about inflation have led to uncertainty around rate cuts, and while some of the vertical software stocks have fared somewhat better than others, they collectively declined, with share prices falling 0.5% on average since the previous earnings results.

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.

“Our strong performance in the second quarter was marked by eleven cloud deals, including a healthy mix of migrations, expansions, and net-new customers,” said Mike Rosenbaum, chief executive officer, Guidewire.

Guidewire delivered the slowest revenue growth and weakest full-year guidance update of the whole group. The stock is down 5% since the results and currently trades at $111.02.

Read our full report on Guidewire 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 7.3% since the results and currently trades at $240.18.

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

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' billings estimates but a miss of analysts' revenue estimates.

Bentley had the weakest performance against analyst estimates in the group. The stock is down 2.9% since the results and currently trades at $51.

Read our full analysis of Bentley'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 revenue and EPS exceeding analysts' estimates. 

The stock is down 1.5% since the results and currently trades at $68.76.

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

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