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Vertical Software Stocks Q1 Results: Benchmarking Upstart (NASDAQ:UPST)

UPST Cover Image
Vertical Software Stocks Q1 Results: Benchmarking Upstart (NASDAQ:UPST)

As the Q1 earnings season wraps, let's dig into this quarter's best and worst performers in the vertical software industry, including Upstart (NASDAQ:UPST) 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 16 vertical software stocks we track reported a slower Q1; on average, revenues beat analyst consensus estimates by 0.9%. while next quarter's revenue guidance was 2.3% below consensus. 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. The start of 2024 has been a different story as mixed signals have led to market volatility, and vertical software stocks have held roughly steady amidst all this, with share prices up 0.3% on average since the previous earnings results.

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.

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Upstart reported revenues of $127.8 million, up 24.2% year on year, topping analysts' expectations by 2.4%. It was a slower quarter for the company, with underwhelming revenue guidance for the next quarter and a decline in its gross margin.

Upstart Total Revenue
Upstart Total Revenue

The stock is up 2.3% since the results and currently trades at $25.03.

Read our full report on Upstart here, it's free.

Best Q1: Toast (NYSE:TOST)

Founded by three MIT engineers at a local Cambridge bar, Toast (NYSE:TOST) provides integrated point-of-sale (POS) hardware, software, and payments solutions for restaurants.

Toast reported revenues of $1.08 billion, up 31.3% year on year, outperforming analysts' expectations by 3.3%. It was a very strong quarter for the company, with a significant improvement in its gross margin and a solid beat of analysts' billings estimates.

Toast Total Revenue
Toast Total Revenue

Toast pulled off the fastest revenue growth among its peers. The stock is down 4.8% since the results and currently trades at $22.59.

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

Weakest Q1: 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 $466.6 million, down 8.4% year on year, falling short of analysts' expectations by 15.9%. It was a weak quarter for the company, with a decline in its gross margin and a miss of analysts' average contract value estimates.

ANSYS had the weakest performance against analyst estimates in the group. The stock is up 1.4% since the results and currently trades at $325.72.

Read our full analysis of ANSYS's results here.

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 $118.1 million, up 6.4% year on year, surpassing analysts' expectations by 1.4%. It was a weak quarter for the company, with management forecasting growth to slow and a miss of analysts' billings estimates.

Doximity had the weakest full-year guidance update among its peers. The stock is up 22.2% since the results and currently trades at $29.02.

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

Adobe (NASDAQ:ADBE)

One of the most well-known Silicon Valley software companies around, Adobe (NASDAQ:ADBE) is a leading provider of software as service in the digital design and document management space.

Adobe reported revenues of $5.18 billion, up 11.3% year on year, in line with analysts' expectations. It was a slower quarter for the company, with and underwhelming revenue guidance for the next quarter.

The stock is down 19.3% since the results and currently trades at $461.53.

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

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