The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Olo (NYSE: OLO) and the rest of the vertical software stocks fared in Q2.
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 14 vertical software stocks we track reported a very strong Q2. As a group, revenues beat analysts’ consensus estimates by 4.1% 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.
Olo (NYSE: OLO)
Processing over two million orders daily across 80,000 restaurant locations nationwide, Olo (NYSE: OLO) provides an enterprise-grade SaaS platform that powers digital ordering, delivery, and payment systems for restaurant brands across the United States.
Olo reported revenues of $85.72 million, up 21.6% year on year. This print exceeded analysts’ expectations by 4.2%. Overall, it was a very strong quarter for the company with a meaningful improvement in its net revenue retention rate.
“Olo continued to execute in the second quarter, generating revenue and non-GAAP operating income that exceeded the high-end of their respective guidance ranges,” said Noah Glass, Olo’s Founder and CEO.
Unsurprisingly, the stock is down 1.1% since reporting and currently trades at $10.26.
We think Olo is a good business, but is it a buy today? Read our full report here, it’s free.
Best Q2: Upstart (NASDAQ: UPST)
Using over 2,500 data variables and trained on nearly 82 million repayment events, Upstart (NASDAQ: UPST) is an AI-powered lending platform that uses machine learning to help banks and credit unions more accurately assess borrower risk for personal loans, auto loans, and home equity lines of credit.
Upstart reported revenues of $257.3 million, up 102% year on year, outperforming analysts’ expectations by 13.6%. The business had an exceptional quarter with EBITDA guidance for next quarter exceeding analysts’ expectations.
Upstart achieved the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 26.4% since reporting. It currently trades at $60.83.
Is now the time to buy Upstart? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Agilysys (NASDAQ: AGYS)
With a tech stack that powers everything from check-in to checkout at some of the world's top hospitality venues, Agilysys (NASDAQ: AGYS) develops and provides cloud-based and on-premise software solutions for hotels, resorts, casinos, and restaurants to manage operations and enhance guest experiences.
Agilysys reported revenues of $76.68 million, up 20.7% year on year, exceeding analysts’ expectations by 3.1%. Still, it was a slower quarter as it posted a significant miss of analysts’ EBITDA estimates.
Agilysys delivered the weakest full-year guidance update in the group. As expected, the stock is down 11% since the results and currently trades at $104.25.
Read our full analysis of Agilysys’s results here.
Autodesk (NASDAQ: ADSK)
Starting with AutoCAD in the 1980s and evolving into a comprehensive design ecosystem, Autodesk (NASDAQ: ADSK) provides software solutions for architecture, engineering, construction, manufacturing, and entertainment industries to design, simulate, and visualize projects.
Autodesk reported revenues of $1.76 billion, up 17.1% year on year. This result surpassed analysts’ expectations by 2.3%. It was a very strong quarter as it also produced a solid beat of analysts’ billings estimates and an impressive beat of analysts’ EBITDA estimates.
The stock is up 12% since reporting and currently trades at $323.30.
Read our full, actionable report on Autodesk here, it’s free.
Procore Technologies (NYSE: PCOR)
With a mission to build software for the people that build the world, Procore Technologies (NYSE: PCOR) provides cloud-based software that enables owners, contractors, and other stakeholders to collaborate and manage construction projects from any device.
Procore Technologies reported revenues of $323.9 million, up 13.9% year on year. This print topped analysts’ expectations by 3.9%. Overall, it was a strong quarter as it also put up an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ annual recurring revenue estimates.
The company added 195 customers to reach a total of 17,501. The stock is up 2% since reporting and currently trades at $72.72.
Read our full, actionable report on Procore Technologies here, it’s free.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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