As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the automation software industry, including Pegasystems (NASDAQ:PEGA) 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 mixed Q3. As a group, revenues beat analysts’ consensus estimates by 1.2% while next quarter’s revenue guidance was in line.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
Slowest 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 $325.1 million, down 2.9% year on year. This print fell short of analysts’ expectations by 0.8%. Overall, it was a disappointing quarter for the company with a significant miss of analysts’ EBITDA and billings estimates.
“Pega GenAI Blueprint is creating enormous excitement and fundamentally changing how we engage with our clients,” said Alan Trefler, founder and CEO.
Pegasystems Total Revenue
Pegasystems delivered the weakest performance against analyst estimates and slowest revenue growth of the whole group. Interestingly, the stock is up 34.8% since reporting and currently trades at $93.99.
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 $65.59 billion, up 16% year on year, outperforming analysts’ expectations by 1.6%. The business had a strong quarter with a solid beat of analysts’ operating income estimates.
Microsoft Total Revenue
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 2.8% since reporting. It currently trades at $421.63.
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 $159.3 million, up 11.7% year on year, exceeding analysts’ expectations by 1.1%. Still, it was a mixed quarter as it posted a significant miss of analysts’ billings estimates.
As expected, the stock is down 18.3% since the results and currently trades at $14.20.
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 $154.1 million, up 12.4% year on year. This result beat analysts’ expectations by 1.3%. Aside from that, it was a satisfactory quarter as it also logged a solid beat of analysts’ EBITDA estimates.
Appian had the weakest full-year guidance update among its peers. The stock is down 18.9% since reporting and currently trades at $32.89.
Founded by Fred Luddy, who coded the company's initial prototype on a flight from San Francisco to London, ServiceNow (NYSE:NOW) is a software provider helping companies automate workflows across IT, HR, and customer service.
ServiceNow reported revenues of $2.80 billion, up 22.2% year on year. This print surpassed analysts’ expectations by 1.9%. Taking a step back, it was a satisfactory quarter as it also produced a solid beat of analysts’ current remaining performance obligation estimates.
ServiceNow delivered the fastest revenue growth among its peers. The company added 32 enterprise customers paying more than $1 million annually to reach a total of 2,020. The stock is up 16.8% since reporting and currently trades at $1,060.
Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.
Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
Join Paid Stock Investor Research
Help us make StockStory more helpful to investors like yourself. Join our paid user research session and receive a $50 Amazon gift card for your opinions. Sign up here.
