Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at SoundHound AI (NASDAQ: SOUN) and the best and worst performers in the automation software industry.
The whole purpose of software is to automate tasks to increase productivity. Today, innovative new software techniques, often involving AI and machine learning, are finally allowing automation that has graduated from simple one- or two-step workflows to more complex processes integral to enterprises. The result is surging demand for modern automation software.
The 7 automation software stocks we track reported a very strong Q2. As a group, revenues beat analysts’ consensus estimates by 8.4% while next quarter’s revenue guidance was in line.
Luckily, automation software stocks have performed well with share prices up 23% on average since the latest earnings results.
Best Q2: SoundHound AI (NASDAQ: SOUN)
Born from the idea that machines should understand human speech as naturally as people do, SoundHound AI (NASDAQ: SOUN) develops voice recognition and conversational intelligence technology that enables businesses to integrate voice assistants into their products and services.
SoundHound AI reported revenues of $42.68 million, up 217% year on year. This print exceeded analysts’ expectations by 31.2%. Overall, it was an incredible quarter for the company with an impressive beat of analysts’ billings estimates and a solid beat of analysts’ EBITDA estimates.
SoundHound AI pulled off the biggest analyst estimates beat and fastest revenue growth of the whole group. Unsurprisingly, the stock is up 78.5% since reporting and currently trades at $19.19.
ServiceNow (NYSE: NOW)
Built on a single code base that processes over 4 billion workflow transactions daily, ServiceNow (NYSE: NOW) provides a cloud-based platform that helps organizations automate and digitize workflows across departments, from IT and HR to customer service and security.
ServiceNow reported revenues of $3.22 billion, up 22.4% year on year, outperforming analysts’ expectations by 2.9%. The business had an exceptional quarter with an impressive beat of analysts’ billings and EBITDA estimates.
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 5.3% since reporting. It currently trades at $904.50.
Is now the time to buy ServiceNow? Access our full analysis of the earnings results here, it’s free for active Edge members.
Slowest Q2: UiPath (NYSE: PATH)
Starting with robotic process automation (RPA) and evolving into a comprehensive automation powerhouse, UiPath (NYSE: PATH) provides an AI-powered business automation platform that enables organizations to create software robots that mimic human actions to streamline repetitive tasks and processes.
UiPath reported revenues of $361.7 million, up 14.4% year on year, exceeding analysts’ expectations by 4.1%. It was a satisfactory quarter as it also posted a solid beat of analysts’ EBITDA estimates but a significant miss of analysts’ billings estimates.
UiPath delivered the weakest full-year guidance update in the group. Interestingly, the stock is up 44.5% since the results and currently trades at $15.64.
Read our full analysis of UiPath’s results here.
Microsoft (NASDAQ: MSFT)
Originally named "Micro-soft" for microcomputer software when founded in 1975, Microsoft (NASDAQ: MSFT) is a global technology company that develops software, cloud services, devices, and AI solutions for consumers, businesses, and organizations worldwide.
Microsoft reported revenues of $76.44 billion, up 18.1% year on year. This result surpassed analysts’ expectations by 3.5%. Overall, it was an exceptional quarter as it also produced an impressive beat of analysts’ revenue estimates and a narrow beat of analysts’ revenue estimates, as Personal Computing, Intelligent Cloud, and Business Services all beat.
The stock is flat since reporting and currently trades at $514.26.
Read our full, actionable report on Microsoft here, it’s free for active Edge members.
Pegasystems (NASDAQ: PEGA)
With a "Center-out Business Architecture" approach that transcends organizational silos, Pegasystems (NASDAQ: PEGA) develops software that helps organizations automate workflows and use artificial intelligence to improve customer experiences and business processes.
Pegasystems reported revenues of $384.5 million, up 9.5% year on year. This number topped analysts’ expectations by 5.9%. It was a strong quarter as it also logged a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ revenue estimates.
Pegasystems had the slowest revenue growth among its peers. The stock is up 4.7% since reporting and currently trades at $53.36.
Read our full, actionable report on Pegasystems here, it’s free for active Edge members.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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