Wrapping up Q1 earnings, we look at the numbers and key takeaways for the vertical software stocks, including Q2 Holdings (NYSE: QTWO) 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 14 vertical software stocks we track reported a strong Q1. As a group, revenues beat analysts’ consensus estimates by 2.8% while next quarter’s revenue guidance was in line.
Luckily, vertical software stocks have performed well with share prices up 10.1% on average since the latest earnings results.
Q2 Holdings (NYSE: QTWO)
Founded in 2004 by Hank Seale, Q2 (NYSE: QTWO) offers software-as-a-service that enables small banks to provide online banking and consumer lending services to their clients.
Q2 Holdings reported revenues of $189.7 million, up 14.6% year on year. This print exceeded analysts’ expectations by 1.7%. Overall, it was a very strong quarter for the company with 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 $90.
Is now the time to buy Q2 Holdings? Access our full analysis of the earnings results here, it’s free.
Best Q1: Veeva Systems (NYSE: VEEV)
Built on top of Salesforce as one of the first vertical-focused cloud platforms, Veeva (NYSE: VEEV) provides data and customer relationship management (CRM) software for organizations in the life sciences industry.
Veeva Systems reported revenues of $759 million, up 16.7% year on year, outperforming analysts’ expectations by 4.2%. The business had an exceptional quarter with a solid beat of analysts’ billings estimates and EPS guidance for next quarter exceeding analysts’ expectations.
Veeva Systems scored the highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 21.3% since reporting. It currently trades at $285.
Is now the time to buy Veeva Systems? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: Doximity (NYSE: DOCS)
Founded in 2010 and named for a combination of “docs” and “proximity”, Doximity (NYSE: DOCS) is the leading social network for U.S. medical professionals.
Doximity reported revenues of $138.3 million, up 17.1% year on year, exceeding analysts’ expectations by 3.5%. Still, it was a slower quarter as it posted full-year guidance of slowing revenue growth and EBITDA guidance for next quarter missing analysts’ expectations significantly.
The stock is flat since the results and currently trades at $58.80.
Read our full analysis of Doximity’s results here.
Upstart (NASDAQ: UPST)
Founded by the former head of Google's enterprise business, Upstart (NASDAQ: UPST) is an AI-powered lending platform facilitating loans for banks and consumers.
Upstart reported revenues of $213.4 million, up 67% year on year. This print topped analysts’ expectations by 5.2%. It was a very strong quarter as it also produced EBITDA guidance for next quarter exceeding analysts’ expectations.
Upstart scored the biggest analyst estimates beat and fastest revenue growth among its peers. The stock is up 5.8% since reporting and currently trades at $54.38.
Read our full, actionable report on Upstart here, it’s free.
Procore (NYSE: PCOR)
Used to manage the multi-year expansion of the Panama Canal that began in 2007, Procore (NYSE: PCOR) offers a software-as-service project, finance, and quality management platform for the construction industry.
Procore reported revenues of $310.6 million, up 15.3% year on year. This number surpassed analysts’ expectations by 2.6%. Overall, it was a strong quarter as it also recorded accelerating customer growth and an impressive beat of analysts’ EBITDA estimates.
The company added 218 customers to reach a total of 17,306. The stock is up 7.4% since reporting and currently trades at $67.86.
Read our full, actionable report on Procore here, it’s free.
Market Update
Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.
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