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 design software stocks fared in Q2, starting with Adobe (NASDAQ:ADBE).
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 5 design software stocks we track reported a very strong Q2. As a group, revenues beat analysts’ consensus estimates by 4.2% while next quarter’s revenue guidance was in line.
While some design software stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 2% since the latest earnings results.
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 $5.87 billion, up 10.6% year on year. This print exceeded analysts’ expectations by 1.5%. Overall, it was a strong quarter for the company with a solid beat of analysts’ billings estimates and full-year EPS guidance slightly topping analysts’ expectations.
“Our strategy to deliver ground-breaking innovation for Business Professionals and Consumers, and Creative and Marketing Professionals is delighting customers and we are pleased to raise Adobe’s FY25 revenue target,” said Shantanu Narayen, chair and CEO, Adobe.
Adobe delivered the weakest performance against analyst estimates and weakest full-year guidance update of the whole group. Unsurprisingly, the stock is down 14.6% since reporting and currently trades at $353.52.
Is now the time to buy Adobe? Access our full analysis of the earnings results here, it’s free.
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 a solid beat of analysts’ EBITDA estimates.
PTC achieved 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 4.4% since reporting. It currently trades at $212.28.
Is now the time to buy PTC? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Unity (NYSE:U)
Powering over half of the world's mobile games and expanding into industries from automotive to architecture, Unity (NYSE:U) provides software tools and services that allow developers to create, run, and monetize interactive 2D and 3D content across multiple platforms.
Unity reported revenues of $440.9 million, down 1.9% year on year, exceeding analysts’ expectations by 3.1%. 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’ billings estimates and an impressive beat of analysts’ EBITDA estimates.
Unity delivered the slowest revenue growth in the group. Interestingly, the stock is up 6.4% since the results and currently trades at $36.12.
Read our full analysis of Unity’s results here.
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 topped analysts’ expectations by 3.9%. It was a strong quarter as it also recorded 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 down 9.8% since reporting and currently trades at $64.30.
Read our full, actionable report on Procore Technologies here, it’s free.
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 surpassed analysts’ expectations by 1.8%. Overall, it was a very strong quarter as it also put up a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ billings estimates.
The stock is up 3.5% since reporting and currently trades at $345.45.
Read our full, actionable report on Cadence Design Systems here, it’s free.
Market Update
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
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