Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Unity (NYSE:U) and the best and worst performers in the design software industry.
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 weaker Q2. As a group, revenues beat analysts’ consensus estimates by 1.8% while next quarter’s revenue guidance was 0.8% below.
Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. This year has been a different story as mixed inflation signals have led to market volatility. However, design software stocks have held steady amidst all this with share prices up 4.8% on average since the latest earnings results.
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 $449.3 million, down 15.8% year on year. This print exceeded analysts’ expectations by 1.7%. Despite the top-line beat, it was still a weaker quarter for the company with a miss of analysts’ billings estimates.
Unity delivered the slowest revenue growth of the whole group. Interestingly, the stock is up 13.1% since reporting and currently trades at $16.24.
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Best Q2: 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 $1.06 billion, up 8.6% year on year, outperforming analysts’ expectations by 1.7%. It performed better than its peers, but it was unfortunately a mixed quarter for the company with a solid beat of analysts’ billings estimates but a decline in its gross margin.
Cadence scored the highest full-year guidance raise among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 5.4% since reporting. It currently trades at $271.94.
Weakest Q2: PTC (NASDAQ:PTC) Used to design the Airbus A380 and Boeing (NYSE:BA) 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 $518.6 million, down 4.4% year on year, falling short of analysts’ expectations by 2.8%. It was a weak quarter for the company with a miss of analysts’ billings estimates and a decline in its gross margin.
PTC had the weakest performance against analyst estimates and weakest full-year guidance update in the group. As expected, the stock is down 3.2% since the results and currently trades at $172.05.
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 $5.31 billion, up 10.2% year on year, in line with analysts’ expectations. More broadly, it was a weak quarter for the company with and a miss of analysts’ billings estimates.
The stock is up 16.2% since reporting and currently trades at $533.29.
ANSYS (NASDAQ:ANSS) Used to help design the Mars Rover, Ansys (NASDAQ:ANSS) offers a software-as-a-service platform that enables simulation for engineering and design.
ANSYS reported revenues of $594.1 million, up 19.6% year on year, surpassing analysts’ expectations by 6.9%. Overall, it was a slower quarter for the company with a miss of analysts’ average contract value estimates and a decline in its gross margin.
ANSYS scored the biggest analyst estimates beat among its peers. The stock is up 4% since reporting and currently trades at $326.31.
This content was originally published on Stock Story
