As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the vertical software industry, including Agilysys (NASDAQ:AGYS) 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.
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 exceeded analysts’ expectations by 1.1%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ EBITDA estimates and full-year revenue guidance topping analysts’ expectations.
Ramesh Srinivasan, President and CEO of Agilysys, commented, “We are pleased to report another set of excellent results with record revenue for the 11th consecutive quarter at $68.3 million and 16.5% higher than the comparable prior year quarter, 36.6% total subscription revenue growth and Adjusted EBITDA of 17.9% of revenue. Fiscal 2025 second quarter July to September sales, measured in annual contract value terms, were the second highest in the company’s history. We have also made good progress with integrating Book4Time into the business and with the strides made towards realizing anticipated synergies and added value.
Interestingly, the stock is up 25.7% since reporting and currently trades at $139.99.
Is now the time to buy Agilysys? Access our full analysis of the earnings results 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 21.3% since reporting. It currently trades at $67.31.
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 18.8% since the results and currently trades at $446.37.
Read our full analysis of Adobe’s results here.
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 $1.31 billion, up 26.5% year on year. This result surpassed analysts’ expectations by 1.1%. It was a very strong quarter as it also logged EBITDA guidance for next quarter exceeding analysts’ expectations.
The stock is up 14.8% since reporting and currently trades at $37.49.
Read our full, actionable report on Toast here, it’s free.
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 $71.85 million, up 24.3% year on year. This number beat analysts’ expectations by 1.3%. Zooming out, it was a satisfactory quarter as it also logged a solid beat of analysts’ EBITDA estimates but gross merchandise volume in line with analysts’ estimates.
The stock is up 32% since reporting and currently trades at $7.51.
Read our full, actionable report on Olo 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.
Want to invest in winners with rock-solid fundamentals? Check out our Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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