Q3 Earnings Roundup: Guidewire Software (NYSE:GWRE) And The Rest Of The Vertical Software Segment

As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the vertical software industry, including Guidewire Software and its peers.

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 4 vertical software stocks we track reported a very strong Q3. As a group, revenues beat analysts’ consensus estimates by 2.5% while next quarter’s revenue guidance was in line.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 14.4% since the latest earnings results.

Weakest Q3: Guidewire Software

With its systems powering the operations of hundreds of insurance brands across 42 countries, Guidewire Software provides a technology platform that helps property and casualty insurance companies manage their core operations, digital engagement, and analytics.

Guidewire Software reported revenues of $332.6 million, up 26.5% year on year. This print exceeded analysts’ expectations by 4.6%. Overall, it was a satisfactory quarter for the company with an impressive beat of analysts’ EBITDA estimates but a significant miss of analysts’ billings estimates.

Guidewire Software pulled off the biggest analyst estimates beat and fastest revenue growth, but had the weakest full-year guidance update of the whole group. Even though it had a relatively good quarter, the market seems discontent with the results. The stock is down 7.1% since reporting and currently trades at $156.61.

Best Q3: Alarm.com

Processing over 325 billion data points annually from more than 150 million connected devices, Alarm.com provides cloud-based platforms that enable residential and commercial property owners to remotely monitor and control their security, video, energy, and other connected devices.

Alarm.com reported revenues of $256.4 million, up 6.6% year on year, outperforming analysts’ expectations by 2.2%. The business had an exceptional quarter with a solid beat of analysts’ EBITDA estimates and full-year EPS guidance exceeding analysts’ expectations.

The market seems happy with the results as the stock is up 7.1% since reporting. It currently trades at $50.50.

Bentley Systems

Pioneering the concept of "digital twins" for infrastructure projects long before it became an industry buzzword, Bentley Systems provides software solutions that help engineers design, build, and operate infrastructure projects across sectors including roads, bridges, utilities, mining, and industrial facilities.

Bentley Systems reported revenues of $375.5 million, up 12% year on year, exceeding analysts’ expectations by 1.6%. It may have had the worst quarter among its peers, but its results were still good as it also locked in a solid beat of analysts’ EBITDA estimates and a decent beat of analysts’ billings estimates.

Bentley Systems delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 19.9% since the results and currently trades at $39.20.

Read our full analysis of Bentley Systems’s results here.

Manhattan Associates

Built on a "versionless" cloud architecture that delivers quarterly updates to all customers, Manhattan Associates develops cloud-based software that helps retailers, wholesalers, and manufacturers manage their supply chains, inventory, and omnichannel operations.

Manhattan Associates reported revenues of $275.8 million, up 3.4% year on year. This print surpassed analysts’ expectations by 1.6%. Overall, it was a very strong quarter as it also recorded an impressive beat of analysts’ EBITDA estimates and full-year EPS guidance exceeding analysts’ expectations.

Manhattan Associates scored the highest full-year guidance raise but had the slowest revenue growth among its peers. The stock is down 16.8% since reporting and currently trades at $170.21.

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