Earnings results often indicate what direction a company will take in the months ahead. With Q1 behind us, let’s have a look at Toast (NYSE: TOST) 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 16.8% on average since the latest earnings results.

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 $1.34 billion, up 24.4% year on year. This print fell short of analysts’ expectations by 0.8%, but it was still a strong quarter for the company with EBITDA guidance for next quarter exceeding analysts’ expectations.

Toast delivered the weakest performance against analyst estimates of the whole group. Interestingly, the stock is up 18.1% since reporting and currently trades at $43.21.

Is now the time to buy Toast? 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 delivered the highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 17% since reporting. It currently trades at $275.

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.

Interestingly, the stock is up 2.9% since the results and currently trades at $60.13.

Read our full analysis of Doximity’s results here.

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. This number topped analysts’ expectations by 1.7%. It was a very strong quarter as it also recorded EPS guidance for next quarter exceeding analysts’ expectations and a solid beat of analysts’ EBITDA estimates.

The stock is down 4.9% since reporting and currently trades at $280.33.

Read our full, actionable report on Autodesk 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 print beat analysts’ expectations by 2.6%. Overall, it was a strong quarter as it also produced 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 13.2% since reporting and currently trades at $71.57.

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

Market Update

As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.

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