As the craze of earnings season draws to a close, here's a look back at some of the most exciting (and some less so) results from Q1. Today, we are looking at design software stocks, starting with Unity (NYSE:U).
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 weak Q1; on average, revenues were in line with analyst consensus estimates. while next quarter's revenue guidance was 3.2% below consensus. Stocks--especially those trading at higher multiples--had a strong end of 2023, but 2024 has seen periods of volatility. Mixed signals about inflation have led to uncertainty around rate cuts, and while some of the design software stocks have fared somewhat better than others, they collectively declined, with share prices falling 0% on average since the previous earnings results.
Best Q1: 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 $460.4 million, down 8% year on year, topping analysts' expectations by 6.2%. It was a solid quarter for the company, with a significant improvement in its gross margin and a narrow beat of analysts' billings estimates .
Unity achieved the biggest analyst estimates beat of the whole group. The stock is down 35.8% since the results and currently trades at $15.52.
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Procore Technologies (NYSE:NYSE:PCOR) Used to manage the multi-year expansion of the Panama Canal that began in 2007, Procore Technologies (NYSE:PCOR) offers a software-as-service project, finance and quality management platform for the construction industry.
Procore Technologies reported revenues of $269.4 million, up 26.2% year on year, outperforming analysts' expectations by 2.5%. It was a mixed quarter for the company, with a decent beat of analysts' ARR (annual recurring revenue) estimates but a miss of analysts' billings estimates.
Procore Technologies pulled off the fastest revenue growth and highest full-year guidance raise among its peers. The company added 231 customers to reach a total of 16,598. The stock is down 7.7% since the results and currently trades at $63.
Weakest Q1: 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 $466.6 million, down 8.4% year on year, falling short of analysts' expectations by 15.9%. It was a weak quarter for the company, with a decline in its gross margin and a miss of analysts' average contract value estimates.
ANSYS had the weakest performance against analyst estimates and slowest revenue growth in the group. The stock is up 1.1% since the results and currently trades at $324.88.
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 $603.1 million, up 11.2% year on year, surpassing analysts' expectations by 4.6%. It was a slower quarter for the company, with full-year revenue guidance missing analysts' expectations.
PTC had the weakest full-year guidance update among its peers. The stock is up 0.7% since the results and currently trades at $176.03.
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 $1.42 billion, up 11.7% year on year, surpassing analysts' expectations by 1.3%. It was a weaker quarter for the company, with a miss of analysts' billings estimates.
The stock is up 15.3% since the results and currently trades at $243.93.
