Q1 Earnings Reflection for Automation Software Stocks: ServiceNow (NYSE:NOW)

As the Q1 earnings season comes to a close, let’s take a closer look at the best and worst performers of the quarter in the automation software industry, including ServiceNow (NYSE:NOW) and its competitors.

The whole purpose of software is to automate tasks to increase productivity. Today, innovative new software techniques, often including artificial intelligence and machine learning, are finally enabling automation that has moved from simple one- or two-step workflows to more complex processes integral to enterprises. The result is a growing demand for modern automation software.

The 5 automation software stocks we track had a weak first quarter; on average, revenue was in line with analyst estimates, while revenue forecasts for the next quarter were 4.6% below consensus. Valuation multiples for many growth stocks have not yet returned to their early 2021 highs, but the market was bullish on late 2023 due to cooling inflation. The start of 2024 was a different story, as mixed signals led to market volatility, and automation software stocks had a tough time, with stock prices down an average of 10.7% since their previous earnings results.

ServiceNow (NYSE:NOW)

Founded by Fred Luddy, who coded the company’s first prototype on a flight from San Francisco to London, ServiceNow (NYSE:NOW) offers a software-as-a-service platform that helps companies increase efficiency by enabling them to automate workflows across IT, HR and customer service.

ServiceNow reported revenue of $2.60 billion, up 24.2% year over year, in line with analyst expectations. It was a weak quarter for the company, with growth slowing among large accounts and missing analyst estimates for annualized recurring revenue (ARR).

ServiceNow saw the fastest revenue growth of the group, adding 36 enterprise customers paying more than $1 million annually, bringing the total to 1,933. Shares are up 5.7% since the results were released and are currently trading at $788.95.

The story continues

Is it time to buy ServiceNow? Access our full earnings analysis here, it’s free.

Top Q1: Jamf (NASDAQ:JAMF)

Jamf (NASDAQ:JAMF) was founded in 2002 by Zach Halmstad and Chip Pearson, around the time Apple began dominating the personal computer market. It provides companies with software to manage Apple devices such as Macs, iPads and iPhones.

Jamf reported revenue of $152.1 million, up 15.1% year over year and topping analyst expectations by 2%. It was a slower quarter for the company, which missed analyst estimates on billings and saw its gross margin decline.

Jamf delivered the biggest beat on analyst estimates and the biggest full-year estimate increase among its peers. Shares are down 15.6% since the results and are currently trading at $16.65.

Is It Time to Buy Jamf? Get access to our full earnings analysis here, it’s free.

Weakest Q1: Pegasystems (NASDAQ:PEGA)

Founded in 1983 by Alan Trefler, Pegasystems (NASDAQ:PEGA) offers a software-as-a-service platform that automates and optimizes customer service and engagement workflows.

Pegasystems reported revenue of $330.1 million, up 1.4% year over year and falling 2.1% short of analyst expectations. It was a weak quarter for the company, with gross margin declining and billings missing analyst estimates.

Pegasystems had the weakest results compared to analyst estimates and the slowest revenue growth in the group. Shares are up 2.5% since the results and are currently trading at $60.36.

Read our full analysis of Pegasystems’ results here.

UiPath (NYSE:PATH)

UiPath (NYSE:PATH) was founded in 2005 in Romania as a technology outsourcing company that creates software that helps companies automate repetitive computer tasks.

UiPath reported revenue of $335.1 million, up 15.7% year over year, in line with analyst expectations. It was a weak quarter for the company, with disappointing revenue guidance for the quarter and a decline in gross margin.

UiPath had the weakest full-year guidance update among its peers. Shares are down 29.7% since the results and are currently trading at $12.86.

Read our full, hands-on report on UiPath here, it’s free.

Appian (NASDAQ: APPN)

Appian (NASDAQ:APPN), founded by Matt Calkins and three friends in a Northern Virginia apartment, sells a software platform that lets users build apps without writing a lot of code, so they can build new software faster.

Appian reported revenue of $149.8 million, up 10.8% year over year, in line with analyst expectations. It was a weak quarter for the company, with billings missing analyst estimates and gross margin declining.

Shares of the company have fallen 16.2% since the results were announced and are now trading at $30.76.

Read our full, hands-on Appian white paper here. It’s free.

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