Spotting Winners: Doximity (NYSE:DOCS) And Vertical Software Stocks In Q3

January 14, 2025 at 04:06 AM EST

DOCS Cover Image

As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q3. Today, we are looking at vertical software stocks, starting with Doximity (NYSE: DOCS).

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 15 vertical software stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 3.4% while next quarter’s revenue guidance was 0.7% above.

In light of this news, share prices of the companies have held steady as they are up 2.6% on average since the latest earnings results.

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 $136.8 million, up 20.4% year on year. This print exceeded analysts’ expectations by 7.6%. Overall, it was a stunning quarter for the company with EBITDA guidance for next quarter exceeding analysts’ expectations.

“Our clinical workflow tools saw record use in Q2 with over 600,000 unique active prescribers,” said Jeff Tangney, co-founder and CEO of Doximity.

Doximity pulled off the highest full-year guidance raise of the whole group. Unsurprisingly, the stock is up 18.3% since reporting and currently trades at $51.36.

We think Doximity is a good business, but is it a buy today? Read our full report here, it’s free.

Best Q3: 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 $162.1 million, up 20.5% year on year, outperforming analysts’ expectations by 7.9%. The business had a stunning quarter with an impressive beat of analysts’ EBITDA estimates and revenue guidance for next quarter exceeding analysts’ expectations.

The market seems happy with the results as the stock is up 5% since reporting. It currently trades at $58.25.

Is now the time to buy Upstart? 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 $5.61 billion, up 11.1% year on year, exceeding analysts’ expectations by 1.2%. Still, it was a slower quarter as it posted revenue guidance for next quarter slightly missing analysts’ expectations and a miss of analysts’ billings estimates.

As expected, the stock is down 25.2% since the results and currently trades at $411.37.

Read our full analysis of Adobe’s results here.

Olo (NYSE: OLO)

Founded by Noah Glass, who wanted to get a cup of coffee faster on his way to work, Olo (NYSE: OLO) provides restaurants and food retailers with software to manage food orders and delivery.

Olo reported revenues of $71.85 million, up 24.3% year on year. This print beat analysts’ expectations by 1.3%. Zooming out, it was a satisfactory quarter as it also logged an impressive beat of analysts’ EBITDA estimates but gross merchandise volume in line with analysts’ estimates.

The stock is up 23% since reporting and currently trades at $7.

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

Toast (NYSE: TOST)

Founded by three MIT engineers at a local Cambridge bar, Toast (NYSE: TOST) provides integrated point-of-sale (POS) hardware, software, and payments solutions for restaurants.

Toast reported revenues of $1.31 billion, up 26.5% year on year. This result surpassed analysts’ expectations by 1.1%. Overall, it was a very strong quarter as it also recorded EBITDA guidance for next quarter exceeding analysts’ expectations and an impressive beat of analysts’ EBITDA estimates.

The stock is up 7.8% since reporting and currently trades at $35.21.

Read our full, actionable report on Toast 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 has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), 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 the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.

Want to invest in winners with rock-solid fundamentals? Check out our 9 Best Market-Beating Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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