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 Alarm.com (NASDAQ:ALRM) and the best and worst performers in the vertical software industry.
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 4 vertical software stocks we track reported a mixed Q1; on average, revenues beat analyst consensus estimates by 2.4%. while next quarter's revenue guidance was 0.8% below consensus. 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. The start of 2024 has been a different story as mixed signals have led to market volatility, but vertical software stocks have shown resilience, with share prices up 5% on average since the previous earnings results.
Alarm.com (NASDAQ:ALRM) Founded in 2000 as a business unit within MicroStrategy, Alarm.com (NASDAQ:ALRM) is a software-as-a-service platform that enables users to control their security systems and smart home appliances from a single app.
Alarm.com reported revenues of $223.3 million, up 6.5% year on year, topping analysts' expectations by 1.6%. It was a mixed quarter for the company, with a decent beat of analysts' billings estimates but full-year revenue guidance missing analysts' expectations.
“We are pleased to report solid results and continued momentum across the business in the first quarter,” said Steve Trundle, CEO of Alarm.com.
Alarm.com delivered the slowest revenue growth and weakest full-year guidance update of the whole group. The stock is down 6.7% since the results and currently trades at $64.03.
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Best Q1: Manhattan Associates (NASDAQ:MANH) Boasting major consumer staples and pharmaceutical companies as clients, Manhattan Associates (NASDAQ:MANH) offers a software-as-service platform that helps customers manage their supply chains.
Manhattan Associates reported revenues of $254.6 million, up 15.2% year on year, outperforming analysts' expectations by 4.6%. It was a decent quarter for the company, with full-year revenue guidance topping analysts' expectations but a decline in its gross margin.
Manhattan Associates achieved the biggest analyst estimates beat and highest full-year guidance raise among its peers. The stock is up 6.9% since the results and currently trades at $246.49.
Weakest Q1: Bentley (NASDAQ:BSY) Founded by brothers Keith and Barry Bentley, Bentley Systems (NASDAQ:BSY) offers a software-as-a-service platform that addresses the lifecycle of infrastructure projects such as road networks, tunnel systems, and wastewater facilities.
Bentley reported revenues of $337.8 million, up 7.4% year on year, falling short of analysts' expectations by 0.7%. It was a weak quarter for the company, with a miss of analysts' billings estimates.
Bentley had the weakest performance against analyst estimates in the group. The stock is down 7.7% since the results and currently trades at $49.36.
Guidewire (NYSE:NYSE:GWRE) Founded by two individuals involved in the development of leading procurement software Ariba, Guidewire (NYSE:GWRE) offers insurance companies a software-as-a-service platform to help sell their products and manage their workflows.
Guidewire reported revenues of $240.7 million, up 16% year on year, surpassing analysts' expectations by 4%. It was an ok quarter for the company, with a decent beat of analysts' billings estimates but a decline in its gross margin.
Guidewire pulled off the fastest revenue growth among its peers. The stock is up 27.6% since the results and currently trades at $137.89.
