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 Procore Technologies (NYSE:PCOR).
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 4% 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, and design software stocks have had a rough stretch, with share prices down 6.8% on average since the previous earnings results.
Procore Technologies (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, topping 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 achieved the fastest revenue growth and highest full-year guidance raise of the whole group. The company added 231 customers to reach a total of 16,598. The stock is down 1.5% since the results and currently trades at $67.24.
Is now the time to buy Procore Technologies? Access our full analysis of the earnings results here, it’s free.
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, outperforming analysts’ expectations by 6.2%. It was a mixed quarter for the company, with a significant improvement in its gross margin and a narrow beat of analysts’ billings estimates.
Unity scored the biggest analyst estimates beat among its peers. The stock is down 25.3% since the results and currently trades at $18.05.
Is now the time to buy Unity? Access our full analysis of the earnings results here, it’s free.
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 down 0.4% since the results and currently trades at $320.
Read our full analysis of ANSYS’s results here.
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 $1.01 billion, down 1.2% year on year, falling short of analysts’ expectations by 0.9%. It was a weak quarter for the company, with a miss of analysts’ billings estimates and a decline in its gross margin.
The stock is up 3.7% since the results and currently trades at $295.81.
Read our full, actionable report on Cadence here, it’s free.
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