Q4 Earnings Highs And Lows: 2U (NASDAQ:TWOU) Vs The Rest Of The Vertical Software Stocks
The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how the vertical software stocks have fared in Q4, starting with 2U (NASDAQ:TWOU).
Software is eating the world, and while a large number of solutions such as project management or video conferencing software can be useful to a wide array of industries, some have very specific needs. As a result, vertical software, which addresses industry-specific workflows, is growing and fueled by the pressures to improve productivity, whether it be for a life sciences, education, or banking company.
The 17 vertical software stocks we track reported a mixed Q4; on average, revenues beat analyst consensus estimates by 1.6% while next quarter's revenue guidance was 4.5% below consensus. Valuation multiples for growth stocks have reverted to their historical means after reaching highs in early 2021, but vertical software stocks held their ground better than others, with share prices down 4.3% on average since the previous earnings results.
Weakest Q4: 2U (NASDAQ:TWOU)
Originally named 2tor after the founder's dog Tor, 2U (NASDAQ:TWOU) provides software for universities and colleges to deliver online degree programs and courses.
2U reported revenues of $255.7 million, up 8.3% year on year, falling short of analyst expectations by 9.2%. It was a weak quarter for the company, with full-year revenue guidance missing analysts' expectations.
"I am proud to lead 2U through the next chapter of its journey," said Paul Lalljie, Chief Executive Officer of 2U.
2U delivered the weakest performance against analyst estimates of the whole group. The stock is down 61% since the results and currently trades at $0.36.
Read our full report on 2U here, it's free.
Best Q4: Olo (NYSE:OLO)
Founded by Noah Glass, who wanted to get a cup of coffee faster on his way to work, Olo (NYSE:OLO) provides restaurants and food retailers with software to manage food orders and delivery.
Olo reported revenues of $63 million, up 26.6% year on year, outperforming analyst expectations by 7%. It was an exceptional quarter for the company, as revenue retention stayed solid and free cash flow turned positive.
Olo achieved the biggest analyst estimates beat and highest full-year guidance raise among its peers. The stock is down 9.5% since the results and currently trades at $5.23.
Is now the time to buy Olo? Access our full analysis of the earnings results 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 $609.3 million, up 35.1% year on year, exceeding analyst expectations by 4.1%. It was a weak quarter for the company, with full-year revenue guidance missing analysts' expectations.
Unity achieved the fastest revenue growth but had the weakest full-year guidance update in the group. The stock is up 3.3% since the results and currently trades at $26.08.
Read our full analysis of Unity's results here.
Upstart (NASDAQ:UPST)
Founded by the former head of Google's enterprise business Dave Girouard, Upstart (NASDAQ:UPST) is an AI-powered lending platform that helps banks better evaluate the risk of lending money to a person and provide loans to more customers.
Upstart reported revenues of $140.3 million, down 4.5% year on year, surpassing analyst expectations by 3.7%. It was a mixed quarter for the company, with underwhelming revenue guidance for the next quarter. On the other hand, the company exceeded analysts' revenue and EPS expectations during the quarter.
Upstart had the slowest revenue growth among its peers. The stock is down 22.2% since the results and currently trades at $25.61.
Read our full, actionable report on Upstart here, it's free.
Agilysys (NASDAQ:AGYS)
Originally a subsidiary of Pioneer-Standard Electronics that distributed electronic components, Agilysys (NASDAQ:AGYS) offers a software-as-service platform that helps hotels, resorts, restaurants, and other hospitality businesses manage their operations and workflows.
Agilysys reported revenues of $60.57 million, up 21.3% year on year, in line with analyst expectations. It was a mixed quarter for the company, with EPS and adjusted EBITDA exceeding estimates. On the other hand, its free cash flow missed Wall Street's expectations.
The stock is down 5.4% since the results and currently trades at $82.05.
Read our full, actionable report on Agilysys here, it's free.
Join Paid Stock Investor Research
Help us make StockStory more helpful to investors like yourself. Join our paid user research session and receive a $50 Amazon gift card for your opinions. Sign up here.
