The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how ANSYS (NASDAQ:ANSS) and the rest of the design software stocks fared in Q2.
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 7 design software stocks we track reported a slower Q2. As a group, revenues beat analysts’ consensus estimates by 1.9% while next quarter’s revenue guidance was in line.
After much suspense, the Federal Reserve cut its policy rate by 50bps (half a percent) in September 2024. This marks the central bank’s first easing of monetary policy since 2020 and the end of its most pointed inflation-busting campaign since the 1980s. Inflation had begun to run hot in 2021 post-COVID due to a confluence of factors such as supply chain disruptions, labor shortages, and stimulus spending. While CPI (inflation) readings have been supportive lately, employment measures have prompted some concern. Going forward, the markets will debate whether this rate cut (and more potential ones in 2024 and 2025) is perfect timing to support the economy or a bit too late for a macro that has already cooled too much.
Thankfully, design software stocks have been resilient with share prices up 5.8% on average since the latest earnings results.
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. This print exceeded analysts’ expectations by 6.9%. Despite the top-line beat, it was still 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 of the whole group. Unsurprisingly, the stock is up 2.2% since reporting and currently trades at $320.45.
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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%. The business performed better than its peers, but it was unfortunately a mixed quarter with a solid beat of analysts’ billings estimates but a decline in its gross margin.
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 5.8% since reporting. It currently trades at $270.70.
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 softer quarter as it posted a miss of analysts’ billings estimates and a decline in its gross margin.
PTC delivered the weakest performance against analyst estimates and weakest full-year guidance update in the group. The stock is flat since the results and currently trades at $179.14.
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 $1.51 billion, up 11.9% year on year. This result surpassed analysts’ expectations by 1.5%. Taking a step back, it was a slower quarter as it recorded a miss of analysts’ billings and ARR (annual recurring revenue) estimates.
Autodesk achieved the highest full-year guidance raise among its peers. The stock is up 7% since reporting and currently trades at $276.01.
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. This number beat analysts’ expectations by 3.3%. Taking a step back, it was a mixed quarter as it also produced a solid beat of analysts’ ARR (annual recurring revenue) estimates but decelerating customer growth.
Procore achieved the fastest revenue growth among its peers. The company added 152 customers to reach a total of 16,750. The stock is down 9.1% since reporting and currently trades at $61.11.
This content was originally published on Stock Story
