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 Adobe (NASDAQ:ADBE) 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 satisfactory Q1. As a group, revenues beat analysts’ consensus estimates by 2.5% while next quarter’s revenue guidance was in line.
Thankfully, share prices of the companies have been resilient as they are up 5.8% on average since the latest earnings results.
Weakest Q1: Adobe (NASDAQ:ADBE)
One of the most well-known Silicon Valley software companies around, Adobe (NASDAQ:ADBE) is a leading provider of software as service in the digital design and document management space.
Adobe reported revenues of $5.71 billion, up 10.3% year on year. This print exceeded analysts’ expectations by 1%. It was a good quarter for the company with a decent beat of analysts’ EBITDA estimates.
“Adobe’s success over the next decade will be driven by customer-focused innovation and new offerings for creators, marketing professionals, business professionals and consumers,” said Shantanu Narayen, chair and CEO, Adobe.
Adobe delivered the weakest full-year guidance update of the whole group. The stock is down 5.1% since reporting and currently trades at $416.50.
Is now the time to buy Adobe? Access our full analysis of the earnings results here, it’s free.
Best Q1: Autodesk (NASDAQ:ADSK)
Founded in 1982 by John Walker and growing into one of the industry's behemoths, Autodesk (NASDAQ:ADSK) makes computer-aided design (CAD) software for engineering, construction, and architecture companies.
Autodesk reported revenues of $1.63 billion, up 15.2% year on year, outperforming analysts’ expectations by 1.7%. The business had a very strong quarter with EPS guidance for next quarter exceeding analysts’ expectations and an impressive beat of analysts’ EBITDA estimates.
However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $297.51.
Is now the time to buy Autodesk? 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 $435 million, down 5.5% year on year, exceeding analysts’ expectations by 4.4%. Still, it was a mixed quarter as it posted revenue guidance for next quarter slightly missing analysts’ expectations.
Unity delivered the slowest revenue growth in the group. Interestingly, the stock is up 18.1% since the results and currently trades at $25.20.
Read our full analysis of Unity’s results here.
PTC (NASDAQ:PTC)
Used to design the Airbus A380 and Boeing 787 Dreamliner commercial airplanes, PTC’s (NASDAQ:PTC) software-as-service platform helps engineers and designers create and test products before manufacturing.
PTC reported revenues of $636.4 million, up 5.5% year on year. This print surpassed analysts’ expectations by 5%. Taking a step back, it was a mixed quarter as it also produced a solid beat of analysts’ EBITDA estimates but EPS guidance for next quarter missing analysts’ expectations.
PTC delivered the biggest analyst estimates beat and highest full-year guidance raise among its peers. The stock is up 9.2% since reporting and currently trades at $169.06.
Read our full, actionable report on PTC here, it’s free.
Cadence (NASDAQ:CDNS)
With the name chosen to reflect the idea of a repeating pattern or rhythm in electronic design, Cadence Design Systems (NASDAQ:CDNS) offers a software-as-a-service platform for semiconductor engineering and design.
Cadence reported revenues of $1.24 billion, up 23.1% year on year. This result was in line with analysts’ expectations. Aside from that, it was a satisfactory quarter as it also logged a solid beat of analysts’ EBITDA estimates but a slight miss of analysts’ billings estimates.
Cadence scored the fastest revenue growth but had the weakest performance against analyst estimates among its peers. The stock is up 4% since reporting and currently trades at $297.10.
Read our full, actionable report on Cadence here, it’s free.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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