Reflecting On Design Software Stocks’ Q2 Earnings: Procore (NYSE:PCOR)
Looking back on design software stocks’ Q2 earnings, we examine this quarter’s best and worst performers, including Procore (NYSE:PCOR) and its peers.
The demand for rich, interactive 2D, 3D, VR and AR experiences is growing, and while the ubiquitous metaverse might still be more of a buzzword than a real thing, what is real is the demand for the tools to create these experiences, whether they are games, 3D tours or interactive movies.
The 7 design software stocks we track reported a slower Q2. As a group, revenues beat analysts’ consensus estimates by 1.9% while next quarter’s revenue guidance was in line.
Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. This year has been a different story as mixed inflation signals have led to market volatility. However, design software stocks have held steady amidst all this with share prices up 2.3% on average since the latest earnings results.
Procore (NYSE:PCOR)
Used to manage the multi-year expansion of the Panama Canal that began in 2007, Procore (NYSE:PCOR) offers a software-as-service project, finance, and quality management platform for the construction industry.
Procore reported revenues of $284.3 million, up 24.4% year on year. This print exceeded analysts’ expectations by 3.3%. Despite the top-line beat, it was still a mixed quarter for the company with a solid beat of analysts’ ARR (annual recurring revenue) estimates but decelerating customer growth.
“We are in the early innings of transforming one of the largest and least digitized industries in the world,” said Tooey Courtemanche, Founder, President, and CEO of Procore.
Procore pulled off the fastest revenue growth of the whole group. The company added 152 customers to reach a total of 16,750. Even though it had a great quarter relative to its peers, the market seems discontent with the results. The stock is down 5.1% since reporting and currently trades at $272.80.
Is now the time to buy Procore? Access our full analysis of the earnings results here, it’s free.
Best Q2: Cadence (NASDAQ:CDNS)
With the name chosen to reflect the idea of a repeating pattern or rhythm in electronic design, Cadence Design Systems (NASDAQ:CDNS) offers a software-as-a-service platform for semiconductor engineering and design.
Cadence reported revenues of $1.06 billion, up 8.6% year on year, outperforming analysts’ expectations by 1.7%. The business performed better than its peers, but it was unfortunately a mixed quarter with a solid beat of analysts’ billings estimates but a decline in its gross margin.
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 5.1% since reporting. It currently trades at $272.80.
Is now the time to buy Cadence? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: PTC (NASDAQ:PTC)
Used to design the Airbus A380 and Boeing 787 Dreamliner commercial airplanes, PTC’s (NASDAQ:PTC) software-as-service platform helps engineers and designers create and test products before manufacturing.
PTC reported revenues of $518.6 million, down 4.4% year on year, falling short of analysts’ expectations by 2.8%. It was a softer quarter as it posted a miss of analysts’ billings estimates and a decline in its gross margin.
PTC delivered the weakest performance against analyst estimates and weakest full-year guidance update in the group. As expected, the stock is down 2.2% since the results and currently trades at $173.76.
Read our full analysis of PTC’s results here.
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 $594.1 million, up 19.6% year on year. This print topped analysts’ expectations by 6.9%. Aside from that, it was a mixed quarter as it logged a miss of analysts’ average contract value estimates and a decline in its gross margin.
ANSYS pulled off the biggest analyst estimates beat among its peers. The stock is up 1.4% since reporting and currently trades at $318.05.
Read our full, actionable report on ANSYS here, it’s free.
Unity (NYSE:U)
Started as a game studio by three friends in a Copenhagen apartment, Unity (NYSE:U) is a software as a service platform that makes it easier to develop and monetize new games and other visual digital experiences.
Unity reported revenues of $449.3 million, down 15.8% year on year. This number beat analysts’ expectations by 1.7%. However, it was a mixed quarter as it recorded a miss of analysts’ billings estimates.
Unity had the slowest revenue growth among its peers. The stock is up 42.8% since reporting and currently trades at $20.51.
Read our full, actionable report on Unity here, it’s free.
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