Q3 Rundown: ServiceNow (NYSE:NOW) Vs Other Automation Software Stocks
Earnings results often give us a good indication of what direction a company will take in the months ahead. With Q3 now behind us, let’s have a look at ServiceNow (NYSE:NOW) and its peers.
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 solid Q3; on average, revenues beat analyst consensus estimates by 3.4% while next quarter's revenue guidance was 1.1% below consensus. Inflation (despite slowing) has investors prioritizing near-term cash flows, but automation software stocks held their ground better than others, with the share prices up 11.4% on average since the previous earnings results.
ServiceNow (NYSE:NOW)
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 $2.29 billion, up 25% year on year, in line with analyst expectations. It was a very strong quarter for the company, with accelerating growth in large customers and a narrow beat of analysts' revenue estimates.
ServiceNow achieved the fastest revenue growth of the whole group. The company added 65 enterprise customers paying more than $1m annually to reach a total of 1,789. The stock is up 31% since the results and currently trades at $695.31.
We think ServiceNow is a good business, but is it a buy today? Read our full report here, it's free.
Best Q3: Pegasystems (NASDAQ:PEGA)
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 $334.6 million, up 23.6% year on year, outperforming analyst expectations by 12.8%. It was an incredible quarter for the company, with a significant improvement in its gross margin and an impressive beat of analysts' revenue estimates.
Pegasystems pulled off the biggest analyst estimates beat among its peers. The stock is up 20.8% since the results and currently trades at $45.94.
Is now the time to buy Pegasystems? Access our full analysis of the earnings results here, it's free.
Weakest Q3: 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 $137.1 million, up 16.3% year on year, exceeding analyst expectations by 1.3%. It was a slower quarter for the company, with underwhelming revenue guidance for the next quarter.
The stock is down 18.8% since the results and currently trades at $33.86.
Read our full analysis of Appian's results here.
Everbridge (NASDAQ:EVBG)
Founded as a reaction to the catastrophic events of 9/11, Everbridge (NASDAQ:EVBG) supplies software that helps governments and businesses keep people and infrastructure safe in emergencies.
Everbridge reported revenues of $114.2 million, up 2.5% year on year, in line with analyst expectations. It was a slower quarter for the company, with underwhelming revenue guidance for the next quarter and full-year revenue guidance missing analysts' expectations.
Everbridge had the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update among its peers. The company added 32 customers to reach a total of 405. The stock is up 8.8% since the results and currently trades at $21.95.
Read our full, actionable report on Everbridge here, it's free.
UiPath (NYSE:PATH)
Started in 2005 in Romania as a tech outsourcing company, UiPath (NYSE:PATH) makes software that helps companies automate repetitive computer tasks.
UiPath reported revenues of $325.9 million, up 24% year on year, surpassing analyst expectations by 3.3%. It was a decent quarter for the company, with ARR (annual recurring revenue), reported revenue, and non-GAAP operating profit exceeding expectations. Guidance for next quarter was fine, with ARR ahead while revenue and non-GAAP operating profit were roughly in line.
The stock is up 16.6% since the results and currently trades at $23.02.
Read our full, actionable report on UiPath here, it's free.
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The author has no position in any of the stocks mentioned
