Wrapping up Q3 earnings, we look at the numbers and key takeaways for the design software stocks, including Adobe (NASDAQ:ADBE) and its peers.
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.
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. This print exceeded analysts’ expectations by 0.6%. Despite the top-line beat, it was still a slower quarter for the company with revenue guidance for next quarter slightly missing analysts' estimates.
Adobe delivered the weakest performance against analyst estimates of the whole group. Unsurprisingly, the stock is down 14.9% since reporting and currently trades at $499.60.
Is now the time to buy Adobe? Access our full analysis of the earnings results here, it’s free.
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, outperforming analysts’ expectations by 14.9%. The business had a stunning quarter with a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ annual contract value estimates.
ANSYS achieved the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems content with the results as the stock is up 1.2% since reporting. It currently trades at $337.21.
Is now the time to buy ANSYS? Access our full analysis of the earnings results here, it’s free.
PTC (NASDAQ:PTC)
Used to design the Airbus A380 and Boeing 787 Dreamliner commercial airplanes, PTC’s (NASDAQ:PTC) software-as-service platform helps engineers and designers create and test products before manufacturing.
PTC reported revenues of $626.5 million, up 14.6% year on year, exceeding analysts’ expectations by 1%. Still, it was a mixed quarter as it posted EPS guidance for next quarter missing analysts’ expectations significantly.
As expected, the stock is down 2.8% since the results and currently trades at $192.49.
Read our full analysis of PTC’s results here.
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. This result topped analysts’ expectations by 2.9%. Overall, it was a very strong quarter as it also logged an impressive beat of analysts’ billings and EBITDA estimates.
The stock is up 18.5% since reporting and currently trades at $299.62.
Read our full, actionable report on Cadence here, it’s free.
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 topped analysts’ expectations by 4.3%. Aside from that, it was a satisfactory quarter as it also logged a solid beat of analysts’ billings estimates but EBITDA guidance for next quarter missing analysts’ expectations.
Unity had the slowest revenue growth and weakest full-year guidance update among its peers. The stock is down 11.2% since reporting and currently trades at $19.69.
Read our full, actionable report on Unity here, it’s free.
Market Update
Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.
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