Let’s dig into the relative performance of PTC (NASDAQ: PTC) and its peers as we unravel the now-completed Q1 design software earnings season.
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 Q1. As a group, revenues beat analysts’ consensus estimates by 2.6% while next quarter’s revenue guidance was in line.
In light of this news, share prices of the companies have held steady as they are up 3.6% on average 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 $636.4 million, up 5.5% year on year. This print exceeded analysts’ expectations by 5%. Despite the top-line beat, it was still a mixed quarter for the company with an impressive beat of analysts’ EBITDA estimates but EPS guidance for next quarter missing analysts’ expectations significantly.
"Q2 was a solid quarter for us, and I remain extremely optimistic about our position as an enabler of the digital economy – particularly our position as a supplier of software tools that make our customers more efficient as they design, manufacture, and service their products," said Neil Barua, President and CEO, PTC.
PTC pulled off the biggest analyst estimates beat and highest full-year guidance raise of the whole group. Unsurprisingly, the stock is up 9.6% since reporting and currently trades at $169.60.
Is now the time to buy PTC? Access our full analysis of the earnings results here, it’s free.
Best Q1: Autodesk (NASDAQ: ADSK)
Founded in 1982 by John Walker and growing into one of the industry's behemoths, Autodesk (NASDAQ: ADSK) makes computer-aided design (CAD) software for engineering, construction, and architecture companies.
Autodesk reported revenues of $1.63 billion, up 15.2% year on year, outperforming analysts’ expectations by 1.7%. The business had a very strong quarter with EPS guidance for next quarter exceeding analysts’ expectations and a solid beat of analysts’ EBITDA estimates.
However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $292.68.
Is now the time to buy Autodesk? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: 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 $435 million, down 5.5% year on year, exceeding analysts’ expectations by 4.4%. Still, it was a mixed quarter as it posted revenue guidance for next quarter slightly missing analysts’ expectations.
Unity delivered the slowest revenue growth in the group. Interestingly, the stock is up 11.6% since the results and currently trades at $23.80.
Read our full analysis of Unity’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 $1.24 billion, up 23.1% year on year. This result was in line with analysts’ expectations. Taking a step back, it was a satisfactory quarter as it also logged an impressive beat of analysts’ EBITDA estimates.
Cadence delivered the fastest revenue growth but had the weakest performance against analyst estimates and weakest performance against analyst estimates among its peers. The stock is up 5% since reporting and currently trades at $300.04.
Read our full, actionable report on Cadence here, it’s free.
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 $5.87 billion, up 10.6% year on year. This print surpassed analysts’ expectations by 1.5%. Overall, it was a strong quarter as it also put up a solid beat of analysts’ billings estimates and full-year EPS guidance slightly topping analysts’ expectations.
The stock is down 5.6% since reporting and currently trades at $391.
Read our full, actionable report on Adobe 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 2024, a quarter in November) have propped up markets, 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.
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