First-quarter software vertical abandonment: Olo (NYSE:OLO) versus the rest

Earnings results often indicate where a company will go in the coming months. With the first quarter behind us, let’s take a look at Olo (NYSE:OLO) and its competitors.

Software is devouring the world, and while a large number of solutions such as project management software or video conferencing software can be useful in many industries, some have very specific needs. As a result, vertical software that incorporates industry-specific workflows is growing and driven by pressure to improve productivity, whether it’s a life sciences, education or banking company.

14 software companies we monitor reported a slower first quarter; revenues were higher than analyst estimates by an average of 0.7%. while revenue guidance for the next quarter was 2.8% below consensus. Stocks, especially growth stocks where continued cash flow is more important to the story, had a strong end to 2023. However, the start of 2024 was more volatile due to mixed inflation data, and vertical software stocks held steady has remained more or less stable throughout all of this, with share prices up an average of 3.5% over previous financial results.

Olo (NYSE:OLO)

Founded by Noah Glass who wanted to grab a cup of coffee faster on his commute, Olo (NYSE:OLO) provides restaurants and food retailers with food ordering and delivery management software.

Olo reported revenue of $66.51 million, up 27.3% year-over-year, beating analyst expectations by 3.5%. It was a good quarter for the company, after a solid strengthening of analyst estimates.

“During the first quarter, we got off to a great start on our 2024 financial goals, which included 27% year-over-year revenue growth and non-GAAP operating margin expansion to 8%,” said Noah Glass, founder and CEO of Olo.

Olo received the highest full-year raise in the entire group. Since the results were released, the company’s shares have fallen 0.6% and are currently trading at $4.67.

Is now the time to buy Olo? Access our full earnings performance analysis here, it’s free.

The story continues

Best Q1: Toast (NYSE:TOST)

Founded by three MIT engineers in a local Cambridge bar, Toast (NYSE:TOST) provides integrated point-of-sale (POS) hardware, software and payment solutions.

Toast reported revenue of $1.08 billion, up 31.3% year-over-year, or 3.3% above analyst expectations. It was a very good quarter for the company, with significant improvement in gross margin and solid growth in analyst estimates.

Toast achieved the fastest revenue growth among its competitors. Since the results were released, the company’s shares are up 7.8% and are currently trading at $25.6.

Is now the time to buy toast? Access our full earnings performance analysis here, it’s free.

Weakest Quarter 1: ANSYS (NASDAQ:ANSS)

Used to design the Mars Rover, Ansys (NASDAQ:ANSS) offers a software-as-a-service platform that enables simulation for engineering and design.

ANSYS reported revenue of $466.6 million, down 8.4% year-over-year, or 15.9% below analyst expectations. It was a weak quarter for the company, with analyst revenue estimates missing and gross margin declining.

ANSYS achieved the weakest result compared to analyst estimates in the group. Since the results were released, the company’s shares are up 3.2% and are currently trading at $331.50.

Read our full analysis of ANSYS results here.

2U (NASDAQ:TWOU)

2U (NASDAQ:TWOU), originally named 2tor after Tor’s founder’s dog, provides software for universities and colleges to run online degree programs and courses.

2U reported revenue of $198.4 million, down 16.8% year-over-year, beating analyst expectations by 1.3%. It was a weaker quarter for the company, with disappointing revenue forecasts for the next quarter and a decline in gross margin.

2U had the slowest revenue growth among its competitors. Since the results were released, the company’s shares are up 6.9% and are currently trading at $0.29.

Read our full hands-on report on 2U here – it’s free.

Procore Technologies (NYSE: PCOR)

Used to manage the multi-year expansion of the Panama Canal that began in 2007, Procore Technologies (NYSE: PCOR) offers a software-as-a-service platform for project, financial and quality management for the construction industry.

Procore Technologies reported revenue of $269.4 million, up 26.2% year-over-year, beating analyst expectations by 2.5%. It was a weaker quarter for the company due to missing analyst billing estimates and slowing customer growth.

The company added 231 customers, reaching a total of 16,598 customers. Since the results were released, the company’s shares are up 0.7% and are currently trading at $68.75.

Read our full hands-on report on Procore Technologies here. It is free of charge.

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