‘Investor Anxiety’ Dominates Software Stocks, But Analyst Sees Hope In Some Stocks, Questions About Others — Like Palantir

On average, software companies beat Q2 revenue estimates by 2% and profitability expectations by 5%, RBC analyst Matthew Hedberg said.

Q3 was guided lower for both revenue and profitability as stocks moved an average of 2.1% higher on the day after earnings.

While his attention quickly shifted to off-quarter software, he emerged from the on-quarter cycle feeling okay about the durability of the software and, to a greater extent, its ability to protect margins.

Thematically, he saw better-than-expected results from Ad-tech and Design-based software, somewhat expected solid results from Security, while Application software was weaker.

He came out of the earnings quarter feeling better about the trends from Dynatrace, Inc DT, HubSpot, Inc HUBS, Informatica Inc INFA, Microsoft Corp MSFT, ServiceNow, Inc NOW, PTC Inc PTC, PowerSchool Holdings, Inc PWSC, Xometry, Inc XMTR and ZoomInfo Technologies Inc ZI and there are incremental questions about Fast, Inc FSLY, Olo Inc OLO, Palantir Technologies Inc PLTR and Twilio Inc TWELVE.

MSFT results/guidance were better than expected, particularly in enterprise and Azure, but it raised a warning on SMB trends, he said. The hyper-scale results are better than expected.

NOW’s Q2 cRPO guidance is less expected but could set up a better scenario compared to the seemingly high bar coming out of Q1, he said.

There are mixed messages on firewalls as Check Point Software Technologies Ltd CHKP had inline results/guidance while Fortinet, Inc FTNT noted mixed results.

He cited mixed mid-cap security results as Varonis Systems, Inc VRNS and Qualys, Inc QLYS reported beat-and-maintain quarters, while Rapid7, Inc RPD mixed guidance was noted due to a slowdown in VM spending.

Within observation, DT truncates estimates while Datadog, Inc DDOG discussed the slowdown in consumption as he also saw a decline in consumption from FSLY and TWLO.

Front-office spending appears to be more resilient than expected, highlighted by HUBS and ZI, he said.

Names based on design Altair Engineering Inc ALTR, ANSYS, Inc ANSS, Bentley Systems, Inc BSYand PTC showed resiliency without macro pressure.

Cloudflare, Inc NETHUBS, DDOG, and SolarWinds Corp SWI mentioned good small-biz trends, which are different from MSFT and N-able, Inc NABL.

M&A continues Ping Identity Holding Corp PING going private; within his scope, he thinks M&A will remain a relevant topic.

#Investor #Anxiety #Dominates #Software #Stocks #Analyst #Sees #Hope #Stocks #Questions #Palantir #Source Link #’Investor Anxiety’ Dominates Software Stocks, But Analyst Sees Hope In Some Stocks, Questions About Others — Like Palantir

Leave a Comment