As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the data and analytics software industry, including Elastic (NYSE:ESTC (NYSE:ESTC)) and its peers.
Data is the lifeblood of the internet and software, and its importance to businesses continues to accelerate. Tracking sensors, ubiquitous mobile devices, and every action in every app are producing an explosion of analyzable data which increasingly gets stored in public cloud environments. This drives demand for a variety of software solutions, from databases to analytics software, which help companies derive actionable insights from the data to better understand customer preferences, supply chains, and forecast at ever more granular levels to improve their competitive advantage.
The 14 data and analytics software stocks we track reported a satisfactory Q2. As a group, revenues beat analysts’ consensus estimates by 1.1% while next quarter’s revenue guidance was in line.
Big picture, the Federal Reserve has a dual mandate of inflation and employment. The former had been running hot throughout 2021 and 2022 but cooled towards the central bank's 2% target as of late. This prompted the Fed to cut its policy rate by 50bps (half a percent) in September 2024. Given recent employment data that suggests the US economy could be wobbling, the markets will be assessing whether this rate and future cuts (the Fed signaled more to come in 2024 and 2025) are the right moves at the right time or whether they're too little, too late for a macro that has already cooled.
Luckily, data and analytics software stocks have performed well with share prices up 17.2% on average since the latest earnings results.
Elastic (NYSE:ESTC)
Started by Shay Banon as a search engine for his wife's growing list of recipes at Le Cordon Bleu cooking school in Paris, Elastic (NYSE:ESTC) helps companies integrate search into their products and monitor their cloud infrastructure.Elastic reported revenues of $347.4 million, up 18.3% year on year. This print was in line with analysts’ expectations, but overall, it was a mixed quarter for the company with optimistic earnings guidance for the next quarter but underwhelming revenue guidance for the next quarter.
“We delivered solid first quarter results, outperforming the high end of our guidance for both revenue and profitability, and we continued to see strong adoption of our GenAI offerings. However, we had a slower start to the year with the volume of customer commitments impacted by segmentation changes that we made at the beginning of the year, which are taking longer than expected to settle. We have been taking steps to address this, but it will impact our revenue this year,” said Ash Kulkarni, Chief Executive Officer, Elastic.
Elastic delivered the weakest full-year guidance update of the whole group. The company added 40 enterprise customers paying more than $100,000 annually to reach a total of 1,370. Unsurprisingly, the stock is down 24.4% since reporting and currently trades at $78.40.
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Best Q2: Palantir (NYSE:NYSE:PLTR)
Started by Peter Thiel after seeing US defence agencies struggle in the aftermath of the 2001 terrorist attacks, Palantir (NYSE:PLTR) offers software as a service platform that helps government agencies and large enterprises use data to make better decisions.Palantir reported revenues of $678.1 million, up 27.2% year on year, outperforming analysts’ expectations by 3.9%. The business had a very strong quarter with an impressive beat of analysts’ billings and EBITDA estimates.
Palantir pulled off the highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 81.8% since reporting. It currently trades at $43.77.
Weakest Q2: MicroStrategy (NASDAQ:MSTR)
Founded in 1989 with an initial contract with DuPoint, MicroStrategy (NASDAQ:MSTR) started as a data mining and business intelligence software platform, but in 2020, the company made waves by investing heavily in Bitcoin.MicroStrategy reported revenues of $111.4 million, down 7.4% year on year, falling short of analysts’ expectations by 8.6%. It was a disappointing quarter as it posted a miss of analysts’ EBITDA estimates.
MicroStrategy delivered the weakest performance against analyst estimates and slowest revenue growth in the group. Interestingly, the stock is up 54.7% since the results and currently trades at $233.87.
Health Catalyst (NASDAQ:HCAT)
Founded by healthcare professionals Tom Burton and Steve Barlow in 2008, Health Catalyst (NASDAQ:HCAT) provides data and analytics technology to healthcare organizations, enabling them to improve care and lower costs.Health Catalyst reported revenues of $75.9 million, up 3.7% year on year. This number topped analysts’ expectations by 1.2%. Aside from that, it was a mixed quarter as it also produced an impressive beat of analysts’ EBITDA estimates but a decline in its gross margin.
The stock is up 43.6% since reporting and currently trades at $7.90.
Amplitude (NASDAQ:AMPL)
Born out of a failed voice recognition startup by founder Spenser Skates, Amplitude (NASDAQ:AMPL) is data analytics software helping companies improve and optimize their digital products.Amplitude reported revenues of $73.3 million, up 8.2% year on year. This result beat analysts’ expectations by 1.8%. It was a strong quarter as it also produced an impressive beat of analysts’ billings and EBITDA estimates.
The company added 254 customers to reach a total of 3,224. The stock is up 14.7% since reporting and currently trades at $9.14.
This content was originally published on Stock Story
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