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 automation software stocks fared in Q3, starting with ServiceNow (NYSE:NOW).
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 6 automation software stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 1.2% while next quarter’s revenue guidance was in line.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
ServiceNow (NYSE:NOW)
Founded by Fred Luddy, who coded the company's initial prototype on a flight from San Francisco to London, ServiceNow (NYSE:NOW) is a software provider helping companies automate workflows across IT, HR, and customer service.
ServiceNow reported revenues of $2.80 billion, up 22.2% year on year. This print exceeded analysts’ expectations by 1.9%. Overall, it was a satisfactory quarter for the company with a solid beat of analysts’ current remaining performance obligation estimates but decelerating growth in large customers.
“ServiceNow raised our full year topline guidance on the strength of our Q3 results, once again going beyond expectations,” said ServiceNow Chairman and CEO Bill McDermott.
ServiceNow pulled off the fastest revenue growth of the whole group. The company added 32 enterprise customers paying more than $1 million annually to reach a total of 2,020. Unsurprisingly, the stock is up 17.5% since reporting and currently trades at $1,066.
Is now the time to buy ServiceNow? Access our full analysis of the earnings results here, it’s free.
Best Q3: Microsoft (NASDAQ:MSFT)
Short for microcomputer software, Microsoft (NASDAQ:MSFT) is the largest software vendor in the world with its Windows operating system, Office suite, and cloud computing services.
Microsoft reported revenues of $65.59 billion, up 16% year on year, outperforming analysts’ expectations by 1.6%. The business had a strong quarter with a solid beat of analysts’ operating income estimates and a miss of analysts’ revenue estimates.
However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $433.
Is now the time to buy Microsoft? Access our full analysis of the earnings results here, it’s free.
Slowest Q3: 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 $325.1 million, down 2.9% year on year, falling short of analysts’ expectations by 0.8%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA and billings estimates.
Pegasystems delivered the weakest performance against analyst estimates and slowest revenue growth in the group. Interestingly, the stock is up 35% since the results and currently trades at $94.11.
Read our full analysis of Pegasystems’s results here.
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 $154.1 million, up 12.4% year on year. This print surpassed analysts’ expectations by 1.3%. Zooming out, it was a satisfactory quarter as it also produced an impressive beat of analysts’ EBITDA estimates but EBITDA guidance for next quarter missing analysts’ expectations significantly.
Appian had the weakest full-year guidance update among its peers. The stock is down 16.3% since reporting and currently trades at $33.95.
Read our full, actionable report on Appian here, it’s free.
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 $354.7 million, up 8.8% year on year. This result beat analysts’ expectations by 2%. Taking a step back, it was a mixed quarter as it also logged a solid beat of analysts’ EBITDA estimates but a significant miss of analysts’ billings estimates.
UiPath delivered the biggest analyst estimates beat among its peers. The stock is down 15.8% since reporting and currently trades at $12.58.
Read our full, actionable report on UiPath here, it’s free.
Market Update
Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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