Wrapping up Q3 earnings, we look at the numbers and key takeaways for the vertical software stocks, including nCino (NASDAQ:NCNO) 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 15 vertical software stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 3.4% while next quarter’s revenue guidance was 0.7% above.
Thankfully, share prices of the companies have been resilient as they are up 8.6% on average since the latest earnings results.
nCino (NASDAQ:NCNO)
Founded in 2011 in North Carolina, nCino (NASDAQ:NCNO) makes cloud-based operating systems for banks and provides that software-as-a-service.
nCino reported revenues of $138.8 million, up 13.8% year on year. This print exceeded analysts’ expectations by 1%. Despite the top-line beat, it was still a mixed quarter for the company with a solid beat of analysts’ EBITDA estimates but a significant miss of analysts’ billings estimates.
"We are very pleased with our third quarter results, once again exceeding expectations for both revenues and non-GAAP operating income," said Pierre Naudé, Chairman and CEO at nCino.
Unsurprisingly, the stock is down 18.5% since reporting and currently trades at $34.66.
Read our full report on nCino here, it’s free.
Best Q3: Upstart (NASDAQ:UPST)
Founded by the former head of Google's enterprise business, Upstart (NASDAQ:UPST) is an AI-powered lending platform facilitating loans for banks and consumers.
Upstart reported revenues of $162.1 million, up 20.5% year on year, outperforming analysts’ expectations by 7.9%. The business had a stunning quarter with a solid beat of analysts’ EBITDA estimates and revenue guidance for next quarter exceeding analysts’ expectations.
The market seems happy with the results as the stock is up 14.9% since reporting. It currently trades at $63.73.
Is now the time to buy Upstart? Access our full analysis of the earnings results here, it’s free.
Weakest Q3: 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 $5.61 billion, up 11.1% year on year, exceeding analysts’ expectations by 1.2%. Still, it was a slower quarter as it posted revenue guidance for next quarter slightly missing analysts’ expectations and a miss of analysts’ billings estimates.
As expected, the stock is down 21.6% since the results and currently trades at $431.18.
Read our full analysis of Adobe’s results here.
Agilysys (NASDAQ:AGYS)
Originally a subsidiary of Pioneer-Standard Electronics that distributed electronic components, Agilysys (NASDAQ:AGYS) offers a software-as-service platform that helps hotels, resorts, restaurants, and other hospitality businesses manage their operations and workflows.
Agilysys reported revenues of $68.28 million, up 16.5% year on year. This print surpassed analysts’ expectations by 1.1%. Overall, it was a very strong quarter as it also produced an impressive beat of analysts’ EBITDA estimates and full-year revenue guidance topping analysts’ expectations.
The stock is up 15.1% since reporting and currently trades at $128.16.
Read our full, actionable report on Agilysys here, it’s free.
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 $295.9 million, up 19.4% year on year. This number topped analysts’ expectations by 2.9%. It was a strong quarter as it also put up a solid beat of analysts’ EBITDA estimates and accelerating customer growth.
The company added 225 customers to reach a total of 16,975. The stock is up 26% since reporting and currently trades at $78.97.
Read our full, actionable report on Procore here, it’s free.
Market Update
Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.
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