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Q1 Earnings Review: Vertical Software Stocks Led by Manhattan Associates (NASDAQ:MANH)

StockStory - Wed Jul 5, 2023

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Earnings results often give us a good indication of what direction the company will take in the months ahead. With Q1 now behind us, let’s have a look at Manhattan Associates (NASDAQ:MANH) 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, there are industries that have very specific needs. Whether it is life-sciences, education or banking, the demand for so called vertical software, addressing industry specific workflows, is growing, fueled by the pressures on improving productivity and quality of offerings.

The 4 vertical software stocks we track reported a decent Q1; on average, revenues beat analyst consensus estimates by 3.4%, while on average next quarter revenue guidance was 0.53% above consensus. Tech stocks have been under pressure as inflation makes their long-dated profits less valuable, but vertical software stocks held their ground better than others, with the share prices up 12.8% since the previous earnings results, on average.

Best Q1: Manhattan Associates (NASDAQ:MANH)

Boasting major consumer staples and pharmaceutical companies as clients, Manhattan Associates (NASDAQ:MANH) offers a software-as-service platform that helps customers manage their supply chains.

Manhattan Associates reported revenues of $221 million, up 23.5% year on year, beating analyst expectations by 10.2%. It was an impressive quarter for the company, with a solid beat of analyst estimates. Revenue and EPS guidance for the current year were raised by 4% and 7.5%, respectively, and the updated guidance topped Consensus estimates.

Manhattan Associates Total Revenue

Manhattan Associates pulled off the strongest analyst estimates beat, fastest revenue growth, and highest full year guidance raise of the whole group. The stock is up 28.4% since the results and currently trades at $196.

Is now the time to buy Manhattan Associates? Access our full analysis of the earnings results here, it's free.

Bentley (NASDAQ:BSY)

Founded by brothers Keith and Barry Bentley, Bentley Systems (NASDAQ:BSY) offers a software-as-a-service platform that addresses the lifecycle of infrastructure projects such as road networks, tunnel systems, and wastewater facilities.

Bentley reported revenues of $314.4 million, up 14.1% year on year, beating analyst expectations by 5.28%. It was a strong quarter for the company, with a solid beat of analyst estimates. The company's outlook for 2023 was slightly above for ARR (annual recurring revenue) and revenue and nicely ahead for operating margin.

Bentley Total Revenue

The stock is up 25.7% since the results and currently trades at $52.83.

Is now the time to buy Bentley? Access our full analysis of the earnings results here, it's free.

Weakest Q1: Guidewire Software (NYSE:GWRE)

Founded by two individuals involved in the development of leading procurement software Ariba, Guidewire (NYSE:GWRE) offers a software-as-a-service platform for insurance companies to manage, analyze and sell their products. to manage their workflows.

Guidewire Software reported revenues of $207.5 million, up 5.09% year on year, missing analyst expectations by 3.05%. It was a weak quarter for the company, with a miss of the top line analyst estimates and a decline in gross margin.

Guidewire Software had the weakest performance against analyst estimates and weakest full year guidance update in the group. The stock is down 9.25% since the results and currently trades at $75.18.

Read our full analysis of Guidewire Software's results here.

Alarm.com (NASDAQ:ALRM)

Founded in 2000 as a business unit within MicroStrategy, Alarm.com (NASDAQ:ALRM) is a software-as-a-service platform that enables users to control their security systems and smart home appliances from a single app.

Alarm.com reported revenues of $209.7 million, up 2.08% year on year, beating analyst expectations by 1.17%. It was a decent quarter for the company, with a significant improvement in gross margin.

Alarm.com had the slowest revenue growth among the peers. The stock is up 6.48% since the results and currently trades at $50.96.

Read our full, actionable report on Alarm.com here, it's free.

The author has no position in any of the stocks mentioned