Looking back on vertical software stocks’ Q2 earnings, we examine this quarter’s best and worst performers, including Guidewire Software (NYSE: GWRE) 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 4 vertical software stocks we track reported a very strong Q2. As a group, revenues beat analysts’ consensus estimates by 3.4% while next quarter’s revenue guidance was in line.

While some vertical software stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 3.1% since the latest earnings results.

Guidewire Software (NYSE: GWRE)

With its systems powering the operations of hundreds of insurance brands across 42 countries, Guidewire Software (NYSE: GWRE) provides a technology platform that helps property and casualty insurance companies manage their core operations, digital engagement, and analytics.

Guidewire Software reported revenues of $356.6 million, up 22.3% year on year. This print exceeded analysts’ expectations by 5.8%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ EBITDA estimates and revenue guidance for next quarter exceeding analysts’ expectations.

Guidewire Software pulled off the biggest analyst estimates beat and fastest revenue growth, but had the weakest full-year guidance update of the whole group. Unsurprisingly, the stock is up 12.3% since reporting and currently trades at $243.87.

Is now the time to buy Guidewire Software? Access our full analysis of the earnings results here, it’s free for active Edge members.

Best Q2: Manhattan Associates (NASDAQ: MANH)

Built on a "versionless" cloud architecture that delivers quarterly updates to all customers, Manhattan Associates (NASDAQ: MANH) develops cloud-based software that helps retailers, wholesalers, and manufacturers manage their supply chains, inventory, and omnichannel operations.

Manhattan Associates reported revenues of $272.4 million, up 2.7% year on year, outperforming analysts’ expectations by 3.3%. The business had an exceptional quarter with a solid beat of analysts’ EBITDA estimates and full-year EPS guidance exceeding analysts’ expectations.

Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 5.4% since reporting. It currently trades at $192.40.

Is now the time to buy Manhattan Associates? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q2: Bentley Systems (NASDAQ: BSY)

Pioneering the concept of "digital twins" for infrastructure projects long before it became an industry buzzword, Bentley Systems (NASDAQ: BSY) provides software solutions that help engineers design, build, and operate infrastructure projects across sectors including roads, bridges, utilities, mining, and industrial facilities.

Bentley Systems reported revenues of $364.1 million, up 10.2% year on year, in line with analysts’ expectations. Still, its results were good as it locked in a solid beat of analysts’ annual recurring revenue estimates and a decent beat of analysts’ billings estimates.

Bentley Systems delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 11.5% since the results and currently trades at $50.50.

Read our full analysis of Bentley Systems’s results here.

Alarm.com (NASDAQ: ALRM)

Processing over 325 billion data points annually from more than 150 million connected devices, Alarm.com (NASDAQ: ALRM) provides cloud-based platforms that enable residential and commercial property owners to remotely monitor and control their security, video, energy, and other connected devices.

Alarm.com reported revenues of $254.3 million, up 8.8% year on year. This result beat analysts’ expectations by 4.3%. It was an exceptional quarter as it also produced a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ billings estimates.

Alarm.com achieved the highest full-year guidance raise among its peers. The stock is down 7.7% since reporting and currently trades at $50.21.

Read our full, actionable report on Alarm.com here, it’s free for active Edge members.

Market Update

Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.

Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.