Unpacking Q2 Earnings: Unity (NYSE:U) In The Context Of Other Design Software Stocks
The end of an earnings season can be a great time to assess how companies are handling the current business environment and discover new stocks. Let’s have a look at how Unity (NYSE:U) and the rest of the design software stocks fared in Q2.
The demand for rich, interactive 2D, 3D, VR and AR experiences is growing, and while the ubiquitous metaverse might still be more of a buzzword than a real thing, what is real is the demand for the tools to create these experiences, whether they are games, 3D tours or interactive movies.
The 8 design software stocks we track reported a slower Q2; on average, revenues beat analyst consensus estimates by 1.96%, while on average next quarter revenue guidance was 2.83% under consensus. Tech stocks have been hit the hardest as investors start to value profits over growth and design software stocks have not been spared, with share prices down 11.2% since the previous earnings results, on average.
Started as a game studio by three friends in a Copenhagen apartment, Unity (NYSE:U) is a software as a service platform that makes it easier to develop and monetize new games and other visual digital experiences.
Unity reported revenues of $533.5 million, up 79.6% year on year, beating analyst expectations by 3.12%. It was a decent quarter for the company, with revenue and adjusted EBITDA exceeding expectations. While next quarter's revenue guidance was below Wall Street Consensus and full year revenue guidance was slightly above, adjusted EBITDA guidance for both periods was well ahead.
Unity achieved the fastest revenue growth of the whole group. The stock is down 25.1% since the results and currently trades at $31.05.
Is now the time to buy Unity? Access our full analysis of the earnings results here, it's free.
Best Q2: Procore Technologies (NYSE:PCOR)
Used to manage the multi-year expansion of the Panama Canal that began in 2007, Procore Technologies (NYSE:PCOR) offers a software-as-service project, finance and quality management platform for the construction industry.
Procore Technologies reported revenues of $228.5 million, up 32.7% year on year, beating analyst expectations by 4.84%. It was a "beat and raise" quarter for the company. Revenue and EPS exceeded expectations during the quarter. The company lifted full-year revenue guidance, which also exceeded Wall Street's expectations.
Procore Technologies achieved the strongest analyst estimates beat and highest full year guidance raise among its peers. The company added 615 customers to a total of 15,704. The stock is down 11% since the results and currently trades at $64.41.
Is now the time to buy Procore Technologies? Access our full analysis of the earnings results here, it's free.
Weakest Q2: Matterport (NASDAQ:MTTR)
Founded in 2011 before any mass market VR headset was released, Matterport (NASDAQ:MTTR) provides the hardware and software necessary to turn real world spaces into 3D visualization.
Matterport reported revenues of $39.6 million, up 38.9% year on year, in line with analyst expectations. It was a weak quarter for the company, with revenue guidance for the next quarter and full-year missing analysts' expectations.
Matterport had the weakest full year guidance update in the group. The company added 56,000 customers to a total of 827,000. The stock is down 29.8% since the results and currently trades at $2.21.
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 $4.89 billion, up 10.3% year on year, in line with analyst expectations. It was a decent quarter for the company, with Total digital media ARR (annual recurring revenue) and reported revenue roughly in line with expectations. Adobe beat analysts' EPS expectation on stronger profitability. It was also good to see that next quarter's much-watched Digital Media net new ARR and earnings guidance exceeded Wall Street's estimates.
The stock is down 7.82% since the results and currently trades at $509.22.
Used to help design the Mars Rover, Ansys (NASDAQ:ANSS) offers a software-as-a-service platform that enables simulation for engineering and design.
ANSYS reported revenues of $496.6 million, up 4.8% year on year, beating analyst expectations by 1.33%. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and a decline in its gross margin.
ANSYS had the slowest revenue growth among the peers. The stock is down 7.41% since the results and currently trades at $301.16.
The author has no position in any of the stocks mentioned