Looking back on vertical software stocks’ Q2 earnings, we examine this quarter’s best and worst performers, including Manhattan Associates (NASDAQ: MANH) 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 4 vertical software stocks we track reported a very strong Q2. As a group, revenues beat analysts’ consensus estimates by 3.4% while next quarter’s revenue guidance was in line.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
Best Q2: Manhattan Associates (NASDAQ: MANH)
Built on a "versionless" cloud architecture that delivers quarterly updates to all customers, Manhattan Associates (NASDAQ: MANH) develops cloud-based software that helps retailers, wholesalers, and manufacturers manage their supply chains, inventory, and omnichannel operations.
Manhattan Associates reported revenues of $272.4 million, up 2.7% year on year. This print exceeded analysts’ expectations by 3.3%. Overall, it was an exceptional quarter for the company with a solid beat of analysts’ EBITDA estimates and full-year EPS guidance exceeding analysts’ expectations.
Manhattan Associates delivered the slowest revenue growth of the whole group. Unsurprisingly, the stock is down 1.3% since reporting and currently trades at $200.75.
Is now the time to buy Manhattan Associates? Access our full analysis of the earnings results here, it’s free for active Edge members.
Alarm.com (NASDAQ: ALRM)
Processing over 325 billion data points annually from more than 150 million connected devices, Alarm.com (NASDAQ: ALRM) provides cloud-based platforms that enable residential and commercial property owners to remotely monitor and control their security, video, energy, and other connected devices.
Alarm.com reported revenues of $254.3 million, up 8.8% year on year, outperforming analysts’ expectations by 4.3%. The business had an exceptional quarter with an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ billings estimates.
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 4.4% since reporting. It currently trades at $52.01.
Is now the time to buy Alarm.com? Access our full analysis of the earnings results here, it’s free for active Edge members.
Guidewire Software (NYSE: GWRE)
With its systems powering the operations of hundreds of insurance brands across 42 countries, Guidewire Software (NYSE: GWRE) provides a technology platform that helps property and casualty insurance companies manage their core operations, digital engagement, and analytics.
Guidewire Software reported revenues of $356.6 million, up 22.3% year on year, exceeding analysts’ expectations by 5.8%. It was a satisfactory quarter as it also posted a solid beat of analysts’ EBITDA estimates but a significant miss of analysts’ billings estimates.
Interestingly, the stock is up 6.9% since the results and currently trades at $232.
Read our full analysis of Guidewire Software’s results here.
Bentley Systems (NASDAQ: BSY)
Pioneering the concept of "digital twins" for infrastructure projects long before it became an industry buzzword, Bentley Systems (NASDAQ: BSY) provides software solutions that help engineers design, build, and operate infrastructure projects across sectors including roads, bridges, utilities, mining, and industrial facilities.
Bentley Systems reported revenues of $364.1 million, up 10.2% year on year. This result met analysts’ expectations. Overall, it was a strong quarter as it also produced an impressive beat of analysts’ annual recurring revenue estimates and a decent beat of analysts’ billings estimates.
Bentley Systems had the weakest performance against analyst estimates among its peers. The stock is down 2% since reporting and currently trades at $55.90.
Read our full, actionable report on Bentley Systems here, it’s free for active Edge members.
Market Update
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
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