Let’s dig into the relative performance of Agilysys (NASDAQ: AGYS) and its peers as we unravel the now-completed Q3 vertical software earnings season.

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 13 vertical software stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 3.9% while next quarter’s revenue guidance was in line.

In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.

Agilysys (NASDAQ: AGYS)

With a tech stack that powers everything from check-in to checkout at some of the world's top hospitality venues, Agilysys (NASDAQ: AGYS) develops and provides cloud-based and on-premise software solutions for hotels, resorts, casinos, and restaurants to manage operations and enhance guest experiences.

Agilysys reported revenues of $79.3 million, up 16.1% year on year. This print exceeded analysts’ expectations by 3.1%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ EBITDA estimates and full-year revenue guidance topping analysts’ expectations.

Agilysys achieved the highest full-year guidance raise of the whole group. Unsurprisingly, the stock is up 10% since reporting and currently trades at $126.68.

Is now the time to buy Agilysys? Access our full analysis of the earnings results here, it’s free for active Edge members.

Best Q3: Toast (NYSE: TOST)

Born from the frustrations of three friends waiting too long for their restaurant bill, Toast (NYSE: TOST) provides a cloud-based digital technology platform with software, payment processing, and hardware solutions built specifically for restaurants.

Toast reported revenues of $1.63 billion, up 25.1% year on year, outperforming analysts’ expectations by 3%. The business had a very strong quarter with an impressive beat of analysts’ EBITDA estimates and full-year EBITDA guidance exceeding analysts’ expectations.

Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 1.3% since reporting. It currently trades at $35.18.

Is now the time to buy Toast? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: Upstart (NASDAQ: UPST)

Using over 2,500 data variables and trained on nearly 82 million repayment events, Upstart (NASDAQ: UPST) is an AI-powered lending platform that uses machine learning to help banks and credit unions more accurately assess borrower risk for personal loans, auto loans, and home equity lines of credit.

Upstart reported revenues of $277.1 million, up 70.9% year on year, falling short of analysts’ expectations by 1.3%. It was a softer quarter as it posted full-year revenue guidance missing analysts’ expectations significantly and a significant miss of analysts’ transaction volume estimates.

Upstart delivered the fastest revenue growth but had the weakest performance against analyst estimates in the group. Interestingly, the stock is up 1.1% since the results and currently trades at $47.13.

Read our full analysis of Upstart’s results here.

Unity (NYSE: U)

Powering over half of the world's mobile games and expanding into industries from automotive to architecture, Unity (NYSE: U) provides software tools and services that allow developers to create, run, and monetize interactive 2D and 3D content across multiple platforms.

Unity reported revenues of $470.6 million, up 5.4% year on year. This result topped analysts’ expectations by 4.6%. Overall, it was a very strong quarter as it also put up an impressive beat of analysts’ billings estimates and a solid beat of analysts’ EBITDA estimates.

Unity had the slowest revenue growth among its peers. The stock is up 23.1% since reporting and currently trades at $44.15.

Read our full, actionable report on Unity here, it’s free for active Edge members.

Veeva Systems (NYSE: VEEV)

Originally named "Verticals onDemand" before rebranding in 2009, Veeva Systems (NYSE: VEEV) provides cloud software, data solutions, and consulting services that help life sciences companies develop and bring products to market more efficiently.

Veeva Systems reported revenues of $811.2 million, up 16% year on year. This number beat analysts’ expectations by 2.3%. It was a strong quarter as it also produced full-year EPS guidance beating analysts’ expectations and a solid beat of analysts’ EBITDA estimates.

The stock is down 11.2% since reporting and currently trades at $240.53.

Read our full, actionable report on Veeva Systems here, it’s free for active Edge members.

Market Update

The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.

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