Earnings results often indicate what direction a company will take in the months ahead. With Q1 behind us, let’s have a look at 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 7 automation software stocks we track reported a strong Q1. As a group, revenues beat analysts’ consensus estimates by 5.9% while next quarter’s revenue guidance was in line.
Luckily, automation software stocks have performed well with share prices up 10.8% on average since the latest earnings results.
Best Q1: 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 $475.6 million, up 44.1% year on year. This print exceeded analysts’ expectations by 33.1%. Overall, it was an incredible quarter for the company with an impressive beat of analysts’ billings estimates and a solid beat of analysts’ EBITDA estimates.
Pegasystems pulled off the biggest analyst estimates beat of the whole group. The stock is up 41% since reporting and currently trades at $97.
Is now the time to buy Pegasystems? Access our full analysis of the earnings results here, it’s free.
UiPath (NYSE: PATH)
Started in 2005 in Romania as a tech outsourcing company, UiPath (NYSE: PATH) makes software that helps companies automate repetitive computer tasks.
UiPath reported revenues of $356.6 million, up 6.4% year on year, outperforming analysts’ expectations by 7.4%. The business had a very strong quarter with an impressive beat of analysts’ billings estimates and a solid beat of analysts’ EBITDA estimates.
The market seems unhappy with the results as the stock is down 3.6% since reporting. It currently trades at $12.49.
Is now the time to buy UiPath? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: SoundHound AI (NASDAQ: SOUN)
Founded in 2005, SoundHound AI (NASDAQ: SOUN) develops independent voice artificial intelligence solutions that enable businesses across various industries to offer customized conversational experiences to consumers.
SoundHound AI reported revenues of $29.13 million, up 151% year on year, falling short of analysts’ expectations by 4.4%. It was a softer quarter as it posted a significant miss of analysts’ EBITDA estimates.
SoundHound AI delivered the fastest revenue growth but had the weakest performance against analyst estimates in the group. Interestingly, the stock is up 2.8% since the results and currently trades at $10.
Read our full analysis of SoundHound AI’s results here.
Appian (NASDAQ: APPN)
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 $166.4 million, up 11.1% year on year. This print surpassed analysts’ expectations by 2%. Zooming out, it was a mixed 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 up 2.4% since reporting and currently trades at $31.10.
Read our full, actionable report on Appian here, it’s free.
ServiceNow (NYSE: NOW)
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 $3.09 billion, up 18.6% year on year. This number met analysts’ expectations. More broadly, it was a decent quarter as it also recorded an impressive beat of analysts’ current remaining performance obligation estimates.
The stock is up 24.4% since reporting and currently trades at $1,013.
Read our full, actionable report on ServiceNow here, it’s free.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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