Winners And Losers Of Q3: Toast (NYSE:TOST) Vs The Rest Of The Vertical Software Stocks
Wrapping up Q3 earnings, we look at the numbers and key takeaways for the vertical software stocks, including Toast (NYSE:TOST) and its peers.
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 17 vertical software stocks we track reported a weaker Q3; on average, revenues beat analyst consensus estimates by 1.1% while next quarter's revenue guidance was 1.5% below consensus. Stocks have faced challenges as investors prioritize near-term cash flows, but vertical software stocks held their ground better than others, with the share prices up 13.8% on average since the previous earnings results.
Toast (NYSE:TOST)
Founded by three MIT engineers at a local Cambridge bar, Toast (NYSE:TOST) provides integrated point-of-sale (POS) hardware, software, and payments solutions for restaurants.
Toast reported revenues of $1.03 billion, up 37.2% year on year, falling short of analyst expectations by 0%. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and full-year revenue guidance missing analysts' expectations.
The stock is up 8.7% since the results and currently trades at $18.75.
Read our full report on Toast here, it's free.
Best Q3: Doximity (NYSE:DOCS)
Founded in 2010 and named for a combination of “docs” and “proximity”, Doximity (NYSE: DOCS) is the leading social network for U.S. medical professionals.
Doximity reported revenues of $113.6 million, up 11.2% year on year, outperforming analyst expectations by 4.1%. It was a very strong quarter for the company, with optimistic revenue guidance for the next quarter and a decent beat of analysts' revenue estimates.
The stock is up 38% since the results and currently trades at $28.28.
Is now the time to buy Doximity? Access our full analysis of the earnings results here, it's free.
Weakest Q3: Upstart (NASDAQ:UPST)
Founded by the former head of Google's enterprise business Dave Girouard, Upstart (NASDAQ:UPST) is an AI-powered lending platform that helps banks better evaluate the risk of lending money to a person and provide loans to more customers.
Upstart reported revenues of $134.6 million, down 16.1% year on year, falling short of analyst expectations by 3.7%. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and a miss of analysts' revenue estimates.
Upstart had the weakest performance against analyst estimates and slowest revenue growth in the group. The stock is up 20.5% since the results and currently trades at $35.43.
Read our full analysis of Upstart's results here.
Agilysys (NASDAQ:AGYS)
Originally a subsidiary of Pioneer-Standard Electronics that distributed electronic components, Agilysys (NASDAQ:AGYS) offers a software-as-service platform that helps hotels, resorts, restaurants, and other hospitality businesses manage their operations and workflows.
Agilysys reported revenues of $58.62 million, up 22.8% year on year, surpassing analyst expectations by 3.1%. It was a solid quarter for the company, with a decent beat of analysts' revenue estimates. Furthermore, its adjusted EBITDA margin of 13.7% (which also beat estimates) was particularly impressive as the company is managing through a phase of increased investment requirements.
The stock is up 22.1% since the results and currently trades at $78.
Read our full, actionable report on Agilysys here, it's free.
Q2 Holdings (NYSE:QTWO)
Founded in 2004 by Hank Seale, Q2 (NYSE:QTWO) offers software-as-a-service that enables small banks to provide online banking and consumer lending services to their clients.
Q2 Holdings reported revenues of $155 million, up 7.1% year on year, falling short of analyst expectations by 0.4%. It was a slower quarter for the company, with a miss of analysts' revenue estimates and full-year revenue guidance missing analysts' expectations.
The stock is up 41% since the results and currently trades at $41.99.
Read our full, actionable report on Q2 Holdings here, it's free.
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The author has no position in any of the stocks mentioned
