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 Cadence Design Systems (NASDAQ:CDNS) and the best and worst performers in the design software industry.
The demand for rich, interactive 2D, 3D, VR and AR experiences is growing, and while the ubiquitous metaverse might still be more of a buzzword than a real thing, what is real is the demand for the tools to create these experiences, whether they are games, 3D tours or interactive movies.
The 6 design software stocks we track reported a very strong Q2. As a group, revenues beat analysts’ consensus estimates by 3.8% while next quarter’s revenue guidance was in line.
In light of this news, share prices of the companies have held steady as they are up 3.9% on average since the latest earnings results.
Cadence Design Systems (NASDAQ:CDNS)
Powering the chips behind everything from smartphones to AI accelerators for over 35 years, Cadence Design Systems (NASDAQ:CDNS) provides essential computational software, hardware, and intellectual property used by engineers to design and verify advanced electronic systems and semiconductors.
Cadence Design Systems reported revenues of $1.28 billion, up 20.2% year on year. This print exceeded analysts’ expectations by 1.8%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ billings estimates.
“Cadence delivered an exceptional Q2, with 20% year-over-year revenue growth and stronger than expected bookings. This highlighted the strategic relevance of our AI-driven portfolio and the depth of our customer relationships,” said Anirudh Devgan, president and chief executive officer.
The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $332.
Best Q2: PTC (NASDAQ:PTC)
Originally known as Parametric Technology Corporation until its 2013 rebranding, PTC (NASDAQ:PTC) provides software that helps manufacturers design, develop, and service physical products through digital solutions for CAD, PLM, ALM, and SLM.
PTC reported revenues of $643.9 million, up 24.2% year on year, outperforming analysts’ expectations by 10.4%. The business had an exceptional quarter with EPS guidance for next quarter exceeding analysts’ expectations and an impressive beat of analysts’ EBITDA estimates.
PTC delivered the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. The market seems content with the results as the stock is up 3.4% since reporting. It currently trades at $210.12.
Is now the time to buy PTC? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q2: Adobe (NASDAQ:ADBE)
Originally named after Adobe Creek that ran behind co-founder John Warnock's house, Adobe (NASDAQ:ADBE) develops software products used for digital content creation, document management, and marketing solutions across desktop, mobile, and cloud platforms.
Adobe reported revenues of $5.99 billion, up 10.7% year on year, exceeding analysts’ expectations by 1.4%. It may have had the worst quarter among its peers, but its results were still good as it also locked in an impressive beat of analysts’ billings estimates and a solid beat of analysts’ EBITDA estimates.
Adobe delivered the weakest performance against analyst estimates in the group. Interestingly, the stock is up 1.7% since the results and currently trades at $356.80.
Read our full analysis of Adobe’s results here.
Autodesk (NASDAQ:ADSK)
Starting with AutoCAD in the 1980s and evolving into a comprehensive design ecosystem, Autodesk (NASDAQ:ADSK) provides software solutions for architecture, engineering, construction, manufacturing, and entertainment industries to design, simulate, and visualize projects.
Autodesk reported revenues of $1.76 billion, up 17.1% year on year. This print beat analysts’ expectations by 2.3%. Overall, it was an exceptional quarter as it also logged a solid beat of analysts’ billings estimates and an impressive beat of analysts’ EBITDA estimates.
Autodesk had the weakest full-year guidance update among its peers. The stock is up 7.5% since reporting and currently trades at $310.50.
Read our full, actionable report on Autodesk here, it’s free for active Edge members.
Procore Technologies (NYSE:PCOR)
With a mission to build software for the people that build the world, Procore Technologies (NYSE:PCOR) provides cloud-based software that enables owners, contractors, and other stakeholders to collaborate and manage construction projects from any device.
Procore Technologies reported revenues of $323.9 million, up 13.9% year on year. This result surpassed analysts’ expectations by 3.9%. It was a strong quarter as it also produced an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ annual recurring revenue estimates.
The company added 195 customers to reach a total of 17,501. The stock is up 4.7% since reporting and currently trades at $74.66.
Read our full, actionable report on Procore Technologies 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.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Growth Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.