Let’s dig into the relative performance of Microsoft (NASDAQ: MSFT) and its peers as we unravel the now-completed Q1 automation software earnings season.
The whole purpose of software is to automate tasks to increase productivity. Today, innovative new software techniques, often involving AI and machine learning, are finally allowing automation that has graduated from simple one- or two-step workflows to more complex processes integral to enterprises. The result is surging demand for modern automation software.
The 6 automation software stocks we track reported a satisfactory Q1. As a group, revenues beat analysts’ consensus estimates by 5.6% while next quarter’s revenue guidance was in line.
Luckily, automation software stocks have performed well with share prices up 18.3% on average since the latest earnings results.
Microsoft (NASDAQ: MSFT)
Short for microcomputer software, Microsoft (NASDAQ: MSFT) is the largest software vendor in the world with its Windows operating system, Office suite, and cloud computing services.
Microsoft reported revenues of $70.07 billion, up 13.3% year on year. This print exceeded analysts’ expectations by 2.3%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ operating income estimates and a decent beat of analysts’ EPS estimates.
Interestingly, the stock is up 17% since reporting and currently trades at $459.06.
We think Microsoft is a good business, but is it a buy today? Read our full report here, it’s free.
Best Q1: Pegasystems (NASDAQ: PEGA)
Founded by Alan Trefler in 1983, Pegasystems (NASDAQ: PEGA) offers a software-as-a-service platform to automate and optimize workflows in customer service and engagement.
Pegasystems reported revenues of $475.6 million, up 44.1% year on year, outperforming analysts’ expectations by 33.1%. The business had an incredible quarter with an impressive beat of analysts’ billings estimates and a solid beat of analysts’ EBITDA estimates.
Pegasystems pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 52.6% since reporting. It currently trades at $105.01.
Is now the time to buy Pegasystems? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: SoundHound AI (NASDAQ: SOUN)
Founded in 2005, SoundHound AI (NASDAQ: SOUN) develops independent voice artificial intelligence solutions that enable businesses across various industries to offer customized conversational experiences to consumers.
SoundHound AI reported revenues of $29.13 million, up 151% year on year, falling short of analysts’ expectations by 4.4%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA estimates.
SoundHound AI delivered the fastest revenue growth but had the weakest performance against analyst estimates in the group. Interestingly, the stock is up 6.1% since the results and currently trades at $10.32.
Read our full analysis of SoundHound AI’s results here.
Appian (NASDAQ: APPN)
Founded by Matt Calkins and his three friends out of an apartment in Northern Virginia, Appian (NASDAQ: APPN) sells a software platform that lets its users build applications without using much code, allowing them to create new software more quickly.
Appian reported revenues of $166.4 million, up 11.1% year on year. This result surpassed analysts’ expectations by 2%. Aside from that, it was a mixed quarter as it also produced a solid beat of analysts’ EBITDA estimates.
Appian had the weakest full-year guidance update among its peers. The stock is up 5.5% since reporting and currently trades at $32.06.
Read our full, actionable report on Appian here, it’s free.
Jamf (NASDAQ: JAMF)
Founded in 2002 by Zach Halmstad and Chip Pearson, right around the time when Apple began to dominate the personal computing market, Jamf (NASDAQ: JAMF) provides software for companies to manage Apple devices such as Macs, iPads, and iPhones.
Jamf reported revenues of $167.6 million, up 10.2% year on year. This print topped analysts’ expectations by 0.8%. Taking a step back, it was a mixed quarter as it also recorded full-year revenue guidance topping analysts’ expectations but annual recurring revenue in line with analysts’ estimates.
Jamf scored the highest full-year guidance raise but had the slowest revenue growth among its peers. The stock is up 2.6% since reporting and currently trades at $11.66.
Read our full, actionable report on Jamf here, it’s free.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Growth Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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