Unpacking Q2 Earnings: ServiceNow (NYSE:NOW) In The Context Of Other Automation Software Stocks

Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at ServiceNow (NYSE:NOW) and its peers.

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 5 automation software stocks we track reported a satisfactory Q2. As a group, revenues beat analysts’ consensus estimates by 3.3% while next quarter’s revenue guidance was in line.

Inflation progressed towards the Fed’s 2% goal at the end of 2023, leading to strong stock market performance. On the other hand, 2024 has been a bumpier ride as the market switches between optimism and pessimism around rate cuts and inflation. However, automation software stocks have held steady amidst all this with share prices up 3.5% on average since the latest earnings results.

ServiceNow (NYSE:NOW)

Founded by Fred Luddy, who wrote the code for the company's initial prototype on a flight from San Francisco to London, ServiceNow (NYSE:NOW) offers a software-as-a-service platform that helps companies become more efficient by allowing them to automate workflows across IT, HR, and customer service.

ServiceNow reported revenues of $2.63 billion, up 22.2% year on year. This print was in line with analysts’ expectations, and overall, it was a strong quarter for the company with accelerating growth in large customers and a solid beat of analysts’ billings estimates.

“ServiceNow’s elite-level execution is reflected in our continued outperformance across all topline growth and profitability metrics,” said ServiceNow Chairman and CEO Bill McDermott.

ServiceNow pulled off the fastest revenue growth but had the weakest performance against analyst estimates of the whole group. The company added 55 enterprise customers paying more than $1m annually to reach a total of 1,988. Unsurprisingly, the stock is up 20.7% since reporting and currently trades at $883.

We think ServiceNow is a good business, but is it a buy today? Read our full report here, it’s free.

Best Q2: Pegasystems (NASDAQ:PEGA)

Founded by Alan Trefler in 1983, Pegasystems (NASDAQ:PEGA) offers a software-as-a-service platform to automate and optimize workflows in customer service and engagement.

Pegasystems reported revenues of $351.2 million, up 17.7% year on year, outperforming analysts’ expectations by 8.1%. The business had a stunning quarter with an impressive beat of analysts’ billings estimates and an improvement in its gross margin.

Pegasystems achieved the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 11.6% since reporting. It currently trades at $68.23.

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

Weakest Q2: Appian (NASDAQ:APPN)

Founded by Matt Calkins and his three friends out of an apartment in Northern Virginia, Appian (NASDAQ:APPN) sells a software platform that lets its users build applications without using much code, allowing them to create new software more quickly.

Appian reported revenues of $146.5 million, up 14.7% year on year, exceeding analysts’ expectations by 2.5%. Still, it was a softer quarter as it posted a miss of analysts’ billings estimates and full-year revenue guidance missing analysts’ expectations.

Appian delivered the weakest full-year guidance update in the group. As expected, the stock is down 15% since the results and currently trades at $31.45.

Read our full analysis of Appian’s results here.

UiPath (NYSE:PATH)

Started in 2005 in Romania as a tech outsourcing company, UiPath (NYSE:PATH) makes software that helps companies automate repetitive computer tasks.

UiPath reported revenues of $316.3 million, up 10.1% year on year. This number surpassed analysts’ expectations by 4.1%. Overall, it was a strong quarter as it also produced an impressive beat of analysts’ billings estimates and full-year revenue guidance topping analysts’ expectations.

UiPath scored the highest full-year guidance raise but had the slowest revenue growth among its peers. The stock is down 5.7% since reporting and currently trades at $12.02.

Read our full, actionable report on UiPath here, it’s free.

Jamf (NASDAQ:JAMF)

Founded in 2002 by Zach Halmstad and Chip Pearson, right around the time when Apple began to dominate the personal computing market, Jamf (NASDAQ:JAMF) provides software for companies to manage Apple devices such as Macs, iPads, and iPhones.

Jamf reported revenues of $153 million, up 13.3% year on year. This print was in line with analysts’ expectations. Aside from that, it was a strong quarter as it also recorded a decent beat of analysts’ ARR (annual recurring revenue) estimates but a miss of analysts’ billings estimates.

The stock is up 6% since reporting and currently trades at $17.31.

Read our full, actionable report on Jamf here, it’s free.

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