A Look Back at Vertical Software Stocks' Q3 Earnings: Upstart (NASDAQ:UPST) Vs The Rest Of The Pack
The end of an earnings season can be a great time to assess how companies are handling the current business environment and discover new stocks. Let’s take a look at how Upstart (NASDAQ:UPST) and the rest of the vertical software stocks fared in Q3.
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 17 vertical software stocks we track reported a weaker Q3; on average, revenues beat analyst consensus estimates by 1.1% while next quarter's revenue guidance was 1.5% 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 10.4% on average since the previous earnings results.
Weakest Q3: Upstart (NASDAQ:UPST)
Founded by the former head of Google's enterprise business Dave Girouard, Upstart (NASDAQ:UPST) is an AI-powered lending platform that helps banks better evaluate the risk of lending money to a person and provide loans to more customers.
Upstart reported revenues of $134.6 million, down 14.4% year on year, falling short of analyst expectations by 3.7%. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter. In addition, the company burned through significant amount of cash.
Upstart delivered the weakest performance against analyst estimates and slowest revenue growth of the whole group. The stock is up 3.4% since the results and currently trades at $30.4.
Read our full report on Upstart here, it's free.
Best Q3: Doximity (NYSE:DOCS)
Founded in 2010 and named for a combination of “docs” and “proximity”, Doximity (NYSE: DOCS) is the leading social network for U.S. medical professionals.
Doximity reported revenues of $113.6 million, up 11.2% year on year, outperforming analyst expectations by 4.1%. It was a very strong quarter for the company, with optimistic revenue guidance for the next quarter and a decent beat of analysts' revenue estimates.
The stock is up 43% since the results and currently trades at $29.31.
Is now the time to buy Doximity? Access our full analysis of the earnings results here, it's free.
ANSYS (NASDAQ:ANSS)
Used to help design the Mars Rover, Ansys (NASDAQ:ANSS) offers a software-as-a-service platform that enables simulation for engineering and design.
ANSYS reported revenues of $458.8 million, down 2.9% year on year, falling short of analyst expectations by 1.7%. It was a weak quarter for the company, with full-year revenue guidance missing analysts' expectations and underwhelming revenue guidance for the next quarter.
The company announced that it has agreed to be acquired by Synopsys, with Ansys shareholders set to receive $197 in cash and 0.345 shares of Synopsys common stock per Ansys share. This equates to a $390 per share offer price. The resulting enterprise value is approximately $35 billion, making for a large deal in semis.
The stock is up 18% since the results and currently trades at $328.49.
Read our full analysis of ANSYS's results here.
Olo (NYSE:OLO)
Founded by Noah Glass, who wanted to get a cup of coffee faster on his way to work, Olo (NYSE:OLO) provides restaurants and food retailers with software to manage food orders and delivery.
Olo reported revenues of $57.79 million, up 22.3% year on year, surpassing analyst expectations by 2.6%. It was a strong quarter for the company, with a significant improvement in its net revenue retention rate and optimistic revenue guidance for the next quarter.
The stock is down 16.9% since the results and currently trades at $4.86.
Read our full, actionable report on Olo here, it's free.
2U (NASDAQ:TWOU)
Originally named 2tor after the founder's dog Tor, 2U (NASDAQ:TWOU) provides software for universities and colleges to deliver online degree programs and courses.
2U reported revenues of $229.7 million, down 1.1% year on year, surpassing analyst expectations by 2.5%. It was a mixed quarter for the company, with a significant improvement in its gross margin but full-year revenue guidance missing analysts' expectations.
The stock is down 62.9% since the results and currently trades at $0.88.
Read our full, actionable report on 2U here, it's free.
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The author has no position in any of the stocks mentioned
