As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the productivity software industry, including Atlassian (NASDAQ: TEAM) and its peers.
Rising employee costs and the shift to more remote work has increased the ever-present pressure to improve corporate productivity, which in turn has driven rising demand for productivity software that enables remote work, streamline project management and automate business tasks.
The 17 productivity software stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 4.6% while next quarter’s revenue guidance was in line.
Luckily, productivity software stocks have performed well with share prices up 12.1% on average since the latest earnings results.
Atlassian (NASDAQ: TEAM)
Started by two Australian university friends who funded their startup with credit cards, Atlassian (NASDAQ: TEAM) provides software tools that help teams plan, track, collaborate, and share knowledge across organizations.
Atlassian reported revenues of $1.38 billion, up 22.3% year on year. This print exceeded analysts’ expectations by 2.1%. Despite the top-line beat, it was still a mixed quarter for the company with a solid beat of analysts’ EBITDA estimates but revenue guidance for next quarter slightly missing analysts’ expectations.
“We closed out FY25 delivering over $5.2 billion of revenue, generating over $1.4 billion in free cash flow, and reaching 2.3 million AI monthly active users,” said Mike Cannon-Brookes, Atlassian’s CEO and co-Founder.
Unsurprisingly, the stock is down 6.6% since reporting and currently trades at $159.25.
Is now the time to buy Atlassian? Access our full analysis of the earnings results here, it’s free for active Edge members.
Best Q2: SoundHound AI (NASDAQ: SOUN)
Born from the idea that machines should understand human speech as naturally as people do, SoundHound AI (NASDAQ: SOUN) develops voice recognition and conversational intelligence technology that enables businesses to integrate voice assistants into their products and services.
SoundHound AI reported revenues of $42.68 million, up 217% year on year, outperforming analysts’ expectations by 31.2%. The business had an incredible quarter with an impressive beat of analysts’ billings estimates and a solid beat of analysts’ EBITDA estimates.
SoundHound AI scored the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 67.2% since reporting. It currently trades at $17.97.
Is now the time to buy SoundHound AI? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q2: 8x8 (NASDAQ: EGHT)
Named after its founding year (1987) with "8x8" representing binary code for communications, 8x8 (NASDAQ: EGHT) provides cloud-based contact center and unified communications solutions that enable businesses to manage customer interactions and internal communications through a single platform.
8x8 reported revenues of $181.4 million, up 1.8% year on year, exceeding analysts’ expectations by 2.2%. Still, it was a slower quarter as it posted revenue guidance for next quarter slightly missing analysts’ expectations and a significant miss of analysts’ EBITDA estimates.
As expected, the stock is down 3.4% since the results and currently trades at $1.86.
Read our full analysis of 8x8’s results here.
Box (NYSE: BOX)
Known as the "Content Cloud" for managing the 90% of business data that exists as unstructured files and documents, Box (NYSE: BOX) provides a cloud-based platform that enables organizations to securely manage, share, and collaborate on their content from anywhere on any device.
Box reported revenues of $294 million, up 8.9% year on year. This number beat analysts’ expectations by 1.1%. Taking a step back, it was a mixed quarter as it also produced a decent beat of analysts’ billings estimates but EPS guidance for next quarter slightly missing analysts’ expectations.
Box had the weakest full-year guidance update among its peers. The stock is up 1.6% since reporting and currently trades at $31.67.
Read our full, actionable report on Box here, it’s free for active Edge members.
UiPath (NYSE: PATH)
Starting with robotic process automation (RPA) and evolving into a comprehensive automation powerhouse, UiPath (NYSE: PATH) provides an AI-powered business automation platform that enables organizations to create software robots that mimic human actions to streamline repetitive tasks and processes.
UiPath reported revenues of $361.7 million, up 14.4% year on year. This result topped analysts’ expectations by 4.1%. More broadly, it was a satisfactory quarter as it also logged an impressive beat of analysts’ EBITDA estimates but a significant miss of analysts’ billings estimates.
The stock is up 48.2% since reporting and currently trades at $16.03.
Read our full, actionable report on UiPath here, it’s free for active Edge members.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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