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The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how vertical software stocks fared in Q4, starting with Toast (NYSE:TOST).
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 14 vertical software stocks we track reported a satisfactory Q4. As a group, revenues beat analysts’ consensus estimates by 3.3% while next quarter’s revenue guidance was in line.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 19.6% since the latest 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 $1.34 billion, up 29.2% year on year. This print exceeded analysts’ expectations by 1.7%. Overall, it was a very strong quarter for the company with EBITDA guidance for next quarter exceeding analysts’ expectations.
“Toast had a strong close to 2024, capping off a transformational year where we added a record 28,000 net locations, grew our recurring gross profit streams1 34%, delivered Adjusted EBITDA of $373 million, and achieved our first year of GAAP profitability,” said Toast CEO and Co-Founder Aman Narang.
The stock is down 18.9% since reporting and currently trades at $32.45.
We think Toast is a good business, but is it a buy today? Read our full report here, it’s free.
Best Q4: Upstart (NASDAQ:UPST)
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 $219 million, up 56.1% year on year, outperforming analysts’ expectations by 20.1%. The business had an exceptional quarter with EBITDA guidance for next quarter exceeding analysts’ expectations.
Upstart delivered the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. Although it had a fine quarter compared to its peers, the market seems unhappy with the results as the stock is down 43.9% since reporting. It currently trades at $37.80.