Q3 Earnings Roundup: Olo (NYSE:OLO) And The Rest Of The Vertical Software Segment
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 Olo (NYSE:OLO) and the best and worst performers in the vertical software industry.
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 15 vertical software stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 3.4% while next quarter’s revenue guidance was 0.7% above.
Thankfully, share prices of the companies have been resilient as they are up 5.5% on average since the latest earnings results.
Olo (NYSE:OLO)
Founded by Noah Glass, who wanted to get a cup of coffee faster on his way to work, Olo (NYSE:OLO) provides restaurants and food retailers with software to manage food orders and delivery.
Olo reported revenues of $71.85 million, up 24.3% year on year. This print exceeded analysts’ expectations by 1.3%. Overall, it was a satisfactory quarter for the company with an impressive beat of analysts’ EBITDA estimates but gross merchandise volume in line with analysts’ estimates.
“Team Olo executed well on our top priorities in the third quarter and positioned us to complete a successful 2024. We continued to win, retain, and expand with brands, we drove further innovation across our Order, Pay, and Engage product suites — including the general availability of Olo Pay’s card-present functionality on Qu point-of-sale systems — and we delivered revenue and bottom line performance that exceeded the high-end of our guidance ranges,” said Noah Glass, Olo’s Founder and CEO.
Olo Total Revenue
Interestingly, the stock is up 33% since reporting and currently trades at $7.57.
Founded by the former head of Google's enterprise business, Upstart (NASDAQ:UPST) is an AI-powered lending platform facilitating loans for banks and consumers.
Upstart reported revenues of $162.1 million, up 20.5% year on year, outperforming analysts’ expectations by 7.9%. The business had a stunning quarter with a solid beat of analysts’ EBITDA estimates and revenue guidance for next quarter exceeding analysts’ expectations.
Upstart Total Revenue
The market seems happy with the results as the stock is up 14.1% since reporting. It currently trades at $63.30.
One of the most well-known Silicon Valley software companies around, Adobe (NASDAQ:ADBE) is a leading provider of software as service in the digital design and document management space.
Adobe reported revenues of $5.61 billion, up 11.1% year on year, exceeding analysts’ expectations by 1.2%. Still, it was a slower quarter as it posted revenue guidance for next quarter slightly missing analysts’ expectations and a miss of analysts’ billings estimates.
As expected, the stock is down 23.9% since the results and currently trades at $418.50.
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 $1.22 billion, up 18.8% year on year. This print beat analysts’ expectations by 2.9%. Overall, it was a very strong quarter as it also logged a solid beat of analysts’ billings estimates and an impressive beat of analysts’ EBITDA estimates.
The stock is up 19% since reporting and currently trades at $300.82.
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 $1.31 billion, up 26.5% year on year. This result topped analysts’ expectations by 1.1%. It was a very strong quarter as it also recorded EBITDA guidance for next quarter exceeding analysts’ expectations.
The stock is up 13% since reporting and currently trades at $36.88.
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.
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