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 Appian (NASDAQ:APPN) and the best and worst performers in the automation software industry.
The whole purpose of software is to automate tasks to increase productivity. Today, innovative new software techniques, often involving AI and machine learning, are finally allowing automation that has graduated from simple one- or two-step workflows to more complex processes integral to enterprises. The result is surging demand for modern automation software.
The 6 automation software stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 2.8% 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.
Thankfully, automation software stocks have been resilient with share prices up 5.4% on average since the latest earnings results.
Weakest Q2: Appian (NASDAQ:APPN)
Founded by Matt Calkins and his three friends out of an apartment in Northern Virginia, Appian (NASDAQ:APPN) sells a software platform that lets its users build applications without using much code, allowing them to create new software more quickly.
Appian reported revenues of $146.5 million, up 14.7% year on year. This print exceeded analysts’ expectations by 2.5%. Despite the top-line beat, it was still a slower quarter for the company with a miss of analysts’ billings estimates and a decline in its gross margin.
“Due to enhanced functionality launched this quarter, Appian AI usage nearly doubled,” said Matt Calkins, CEO & Founder.
Appian Total Revenue
Appian delivered the weakest full-year guidance update of the whole group. Unsurprisingly, the stock is down 16.6% since reporting and currently trades at $30.85.
Founded by Alan Trefler in 1983, Pegasystems (NASDAQ:PEGA) offers a software-as-a-service platform to automate and optimize workflows in customer service and engagement.
Pegasystems reported revenues of $351.2 million, up 17.7% year on year, outperforming analysts’ expectations by 8.1%. The business had an exceptional quarter with a solid beat of analysts’ billings estimates and an improvement in its gross margin.
Pegasystems Total Revenue
Pegasystems delivered the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 20.2% since reporting. It currently trades at $73.52.
Founded in 2002 by Zach Halmstad and Chip Pearson, right around the time when Apple began to dominate the personal computing market, Jamf (NASDAQ:JAMF) provides software for companies to manage Apple devices such as Macs, iPads, and iPhones.
Jamf reported revenues of $153 million, up 13.3% year on year, in line with analysts’ expectations. Still, it was a a satisfactory quarter as it posted full-year revenue guidance exceeding analysts’ expectations.
The stock is flat since the results and currently trades at $16.45.
Short for microcomputer software, Microsoft (NASDAQ:MSFT) is the largest software vendor in the world with its Windows operating system, Office suite, and cloud computing services.
Microsoft reported revenues of $64.73 billion, up 15.2% year on year. This number was in line with analysts’ expectations. It was a satisfactory quarter: Revenue roughly met expectations, but all-import Azure constant-currency revenue growth missed.
Microsoft had the weakest performance against analyst estimates among its peers. The stock is flat since reporting and currently trades at $419.20.
Founded by Fred Luddy, who wrote the code for the company's initial prototype on a flight from San Francisco to London, ServiceNow (NYSE:NOW) offers a software-as-a-service platform that helps companies become more efficient by allowing them to automate workflows across IT, HR, and customer service.
ServiceNow reported revenues of $2.63 billion, up 22.2% year on year. This number met analysts’ expectations. It was a strong quarter as it also recorded accelerating growth in large customers and a solid beat of analysts’ billings estimates.
ServiceNow delivered the fastest revenue growth among its peers. The company added 55 enterprise customers paying more than $1m annually to reach a total of 1,988. The stock is up 27.2% since reporting and currently trades at $930.50.
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