Wrapping up Q3 earnings, we look at the numbers and key takeaways for the design software stocks, including PTC (NASDAQ: PTC) and its peers.

The demand for rich, interactive 2D, 3D, VR and AR experiences is growing, and while the ubiquitous metaverse might still be more of a buzzword than a real thing, what is real is the demand for the tools to create these experiences, whether they are games, 3D tours or interactive movies.

The 6 design software stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 4.4% while next quarter’s revenue guidance was 2.9% below.

While some design software stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 2.2% since the latest earnings results.

PTC (NASDAQ: PTC)

Used to design the Airbus A380 and Boeing 787 Dreamliner commercial airplanes, PTC’s (NASDAQ: PTC) software-as-service platform helps engineers and designers create and test products before manufacturing.

PTC reported revenues of $626.5 million, up 14.6% year on year. This print exceeded analysts’ expectations by 1%. Despite the top-line beat, it was still a mixed quarter for the company with management forecasting accelerating growth but EPS guidance for next quarter missing analysts’ expectations significantly.

"In fiscal year 2024, we again delivered solid ARR and cash flow, with year-over-year ARR growth in the low double-digits and cash flow growth above 20%. We have a differentiated strategy that leverages our unique portfolio to help product companies accelerate their time to market and manage increasing complexity. It's an exciting time because our products are at the epicenter of driving business transformation at our customers," said Neil Barua, President and CEO, PTC.

Unsurprisingly, the stock is down 4.4% since reporting and currently trades at $189.24.

Is now the time to buy PTC? Access our full analysis of the earnings results here, it’s free.

Best Q3: ANSYS (NASDAQ: ANSS)

Used to help design the Mars Rover, Ansys (NASDAQ: ANSS) offers a software-as-a-service platform that enables simulation for engineering and design.

ANSYS reported revenues of $601.9 million, up 31.2% year on year, outperforming analysts’ expectations by 14.9%. The business had a stunning quarter with an impressive beat of analysts’ EBITDA estimates and and annual contract value estimates.

ANSYS scored the biggest analyst estimates beat and fastest revenue growth among its peers. However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $334.71.

Is now the time to buy ANSYS? 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 $5.41 billion, up 10.6% year on year, exceeding analysts’ expectations by 0.6%. Still, it was a slower quarter as it posted revenue guidance for next quarter slightly missing analysts’ expectations.

Adobe delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 15.2% since the results and currently trades at $497.59.

Read our full analysis of Adobe’s results here.

Cadence (NASDAQ: CDNS)

With the name chosen to reflect the idea of a repeating pattern or rhythm in electronic design, Cadence Design Systems (NASDAQ: CDNS) offers a software-as-a-service platform for semiconductor engineering and design.

Cadence reported revenues of $1.22 billion, up 18.8% year on year. This result topped analysts’ expectations by 2.9%. It was a very strong quarter as it also logged a solid beat of analysts’ billings and EBITDA estimates.

The stock is up 15.3% since reporting and currently trades at $291.42.

Read our full, actionable report on Cadence here, it’s free.

Unity (NYSE: U)

Started as a game studio by three friends in a Copenhagen apartment, Unity (NYSE: U) is a software as a service platform that makes it easier to develop and monetize new games and other visual digital experiences.

Unity reported revenues of $446.5 million, down 18% year on year. This number surpassed analysts’ expectations by 4.3%. More broadly, it was a satisfactory quarter as it also produced a solid beat of analysts’ billings estimates but EBITDA guidance for next quarter missing analysts’ expectations.

Unity had the slowest revenue growth and weakest full-year guidance update among its peers. The stock is down 19.5% since reporting and currently trades at $17.91.

Read our full, actionable report on Unity 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, a quarter in November) have kept 2024 stock markets frothy, 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 Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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