The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how SoundHound AI (NASDAQ: SOUN) and the rest of the automation software stocks fared in Q2.
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 7 automation software stocks we track reported an exceptional Q2. As a group, revenues beat analysts’ consensus estimates by 8.8% while next quarter’s revenue guidance was in line.
Luckily, automation software stocks have performed well with share prices up 26.3% on average since the latest earnings results.
Best Q2: SoundHound AI (NASDAQ: SOUN)
Born from the idea that machines should understand human speech as naturally as people do, SoundHound AI (NASDAQ: SOUN) develops voice recognition and conversational intelligence technology that enables businesses to integrate voice assistants into their products and services.
SoundHound AI reported revenues of $42.68 million, up 217% year on year. This print exceeded analysts’ expectations by 31.2%. Overall, it was an incredible quarter for the company with a solid beat of analysts’ billings estimates and an impressive beat of analysts’ EBITDA estimates.
SoundHound AI pulled off the biggest analyst estimates beat and fastest revenue growth of the whole group. Unsurprisingly, the stock is up 68.2% since reporting and currently trades at $18.08.
Pegasystems (NASDAQ: PEGA)
With a "Center-out Business Architecture" approach that transcends organizational silos, Pegasystems (NASDAQ: PEGA) develops software that helps organizations automate workflows and use artificial intelligence to improve customer experiences and business processes.
Pegasystems reported revenues of $381.4 million, up 17.3% year on year, outperforming analysts’ expectations by 8.5%. The business had a stunning quarter with an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ revenue estimates.
The market seems happy with the results as the stock is up 13.1% since reporting. It currently trades at $64.52.
Is now the time to buy Pegasystems? Access our full analysis of the earnings results here, it’s free for active Edge members.
Slowest Q2: UiPath (NYSE: PATH)
Starting with robotic process automation (RPA) and evolving into a comprehensive automation powerhouse, UiPath (NYSE: PATH) provides an AI-powered business automation platform that enables organizations to create software robots that mimic human actions to streamline repetitive tasks and processes.
UiPath reported revenues of $361.7 million, up 14.4% year on year, exceeding analysts’ expectations by 4.1%. It was a satisfactory quarter as it also posted an impressive beat of analysts’ EBITDA estimates but a significant miss of analysts’ billings estimates.
UiPath delivered the slowest revenue growth and weakest full-year guidance update in the group. Interestingly, the stock is up 50.6% since the results and currently trades at $16.30.
Read our full analysis of UiPath’s results here.
ServiceNow (NYSE: NOW)
Built on a single code base that processes over 4 billion workflow transactions daily, ServiceNow (NYSE: NOW) provides a cloud-based platform that helps organizations automate and digitize workflows across departments, from IT and HR to customer service and security.
ServiceNow reported revenues of $3.22 billion, up 22.4% year on year. This print topped analysts’ expectations by 2.9%. Overall, it was an exceptional quarter as it also produced a solid beat of analysts’ billings and EBITDA estimates.
ServiceNow had the weakest performance against analyst estimates among its peers. The stock is down 1.8% since reporting and currently trades at $938.
Read our full, actionable report on ServiceNow here, it’s free for active Edge members.
Microsoft (NASDAQ: MSFT)
Originally named "Micro-soft" for microcomputer software when founded in 1975, Microsoft (NASDAQ: MSFT) is a global technology company that develops software, cloud services, devices, and AI solutions for consumers, businesses, and organizations worldwide.
Microsoft reported revenues of $76.44 billion, up 18.1% year on year. This result beat analysts’ expectations by 3.5%. It was an exceptional quarter as it also put up a solid beat of analysts’ revenue estimates and a narrow beat of analysts’ revenue estimates, as Personal Computing, Intelligent Cloud, and Business Services all beat.
The stock is flat since reporting and currently trades at $516.50.
Read our full, actionable report on Microsoft here, it’s free for active Edge members.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
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