Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at Adobe (NASDAQ:ADBE) and its peers.
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.
Stocks, especially growth stocks with cash flows further into the future, had a good end of 2023. On the other hand, this year has seen more volatile stock market swings due to mixed inflation data. However, design software stocks have held steady amidst all this with average share prices relatively unchanged since the latest earnings results.
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. It was a strong quarter for the company. Adobe beat analysts' revenue, RPO, and EPS expectations. These beats were driven by massive outperformance in its net new Digital Media ARR, which clocked in at $487 million (vs estimates of $434 million). Thanks to the strong results, Adobe upgraded its full-year net new Digital Media ARR and EPS guidance, sending the stock price higher.
“Adobe achieved record revenue of $5.31 billion driven by strong growth across Creative Cloud, Document Cloud and Experience Cloud,” said Shantanu Narayen, chair and CEO, Adobe.
Interestingly, the stock is up 16.2% since reporting and currently trades at $533.29.
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Best Q2: Unity (NYSE: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, outperforming analysts’ expectations by 1.7%. It performed better than its peers, but it was unfortunately a weaker quarter for the company with underwhelming net revenue retention rate and a miss of analysts’ billings estimates.
The market seems happy with the results as the stock is up 13.1% since reporting. It currently trades at $16.24.
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.
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 $284.3 million, up 24.4% year on year, surpassing analysts’ expectations by 3.3%. Taking a step back, it was a mixed quarter for the company with a solid beat of analysts’ ARR (annual recurring revenue) estimates but decelerating customer growth.
Procore pulled off the fastest revenue growth among its peers. The company added 152 customers to reach a total of 16,750. The stock is down 17.6% since reporting and currently trades at $55.40.
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, surpassing analysts’ expectations by 1.7%. More broadly, it was 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. The stock is down 5.4% since reporting and currently trades at $271.94.
This content was originally published on Stock Story
