Let’s dig into the relative performance of ANSYS (NASDAQ:ANSS) and its peers as we unravel the now-completed Q3 design software earnings season.
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 6 design software stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 4.4% while next quarter’s revenue guidance was 2.9% below.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
Best Q3: ANSYS (NASDAQ:ANSS)
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 $601.9 million, up 31.2% year on year. This print exceeded analysts’ expectations by 14.9%. Overall, it was a stunning quarter for the company with an impressive beat of analysts’ EBITDA and average contract value estimates.
ANSYS pulled off the biggest analyst estimates beat and fastest revenue growth of the whole group. Unsurprisingly, the stock is up 3.9% since reporting and currently trades at $346.20.
Is now the time to buy ANSYS? Access our full analysis of the earnings results here, it’s free.
Cadence (NASDAQ:CDNS)
With the name chosen to reflect the idea of a repeating pattern or rhythm in electronic design, Cadence Design Systems (NASDAQ:CDNS) offers a software-as-a-service platform for semiconductor engineering and design.
Cadence reported revenues of $1.22 billion, up 18.8% year on year, outperforming analysts’ expectations by 2.9%. The business had a very strong quarter with an impressive beat of analysts’ billings and EBITDA estimates.
The market seems happy with the results as the stock is up 17.5% since reporting. It currently trades at $297.
Is now the time to buy Cadence? Access our full analysis of the earnings results here, it’s free.
Weakest Q3: Adobe (NASDAQ:ADBE)
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 $5.41 billion, up 10.6% year on year, in line with analysts’ expectations. It was a mixed quarter as it posted underwhelming revenue guidance for the next quarter.
Adobe delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 10.6% since the results and currently trades at $525.
Read our full analysis of Adobe’s results here.
Unity (NYSE:U)
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 $446.5 million, down 18% year on year. This number beat analysts’ expectations by 4.3%. Zooming out, it was a satisfactory quarter as it also logged an impressive beat of analysts’ billings estimates.
Unity had the slowest revenue growth and weakest full-year guidance update among its peers. The stock is down 14% since reporting and currently trades at $19.13.
Read our full, actionable report on Unity here, it’s free.
Procore (NYSE:PCOR)
Used to manage the multi-year expansion of the Panama Canal that began in 2007, Procore (NYSE:PCOR) offers a software-as-service project, finance, and quality management platform for the construction industry.
Procore reported revenues of $295.9 million, up 19.4% year on year. This result surpassed analysts’ expectations by 2.9%. It was a strong quarter as it also put up an impressive beat of analysts’ EBITDA estimates and accelerating customer growth.
Procore delivered the highest full-year guidance raise among its peers. The company added 225 customers to reach a total of 16,975. The stock is up 12.5% since reporting and currently trades at $70.50.
Read our full, actionable report on Procore here, it’s free.
Market Update
As expected, the Federal Reserve cut its policy rate by 25bps (a quarter of a percent) in November 2024 after Donald Trump triumphed in the US Presidential election. This marks the central bank's second easing of monetary policy after a large 50bps rate cut two months earlier. Going forward, the markets will debate whether these rate cuts (and more potential ones in 2025) are perfect timing to support the economy or a bit too late for a macro that has already cooled too much. Adding to the degree of difficulty is a new Republican administration that could make large changes to corporate taxes and prior efforts such as the Inflation Reduction Act.
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.
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