PEGA) and other automation software stocks

As the first-quarter 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 Pegasystems (NASDAQ:PEGA) and its peers.

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 9.1% since their previous earnings results.

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. Overall, it was a weak quarter for the company, with gross margin declining and billings missing analyst estimates.

“In the first quarter, we delivered Pega GenAI BlueprintTM, a revolutionary technology that radically changes the way we connect with our customers, helping them reimagine and grow their businesses,” said Alan Trefler, founder and CEO.

Pegasystems delivered the weakest results to analyst estimates and the slowest revenue growth of the group. Shares are up 1.2% since the report and are currently trading at $59.60.

Read our full report on Pegasystems 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 beating analyst expectations by 2%. The company outperformed its peers but had a slower quarter as it missed analyst estimates on billings and its gross margin declined.

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Jamf saw the largest beat on analyst estimates and the largest full-year estimate increase among its peers. While it had a great quarter compared to its peers, the market seems dissatisfied with the results, as the stock is down 9.3% since the report. It currently trades at $17.89.

Is it time to buy Jamf? Get access to our full earnings analysis here, it’s free.

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 of the group. As expected, shares are down 33.5% since the results and are currently trading at $12.17.

Read our full analysis of UiPath’s results here.

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. To put that in perspective, it was a weak quarter for the company, with slowing growth among large customers and missing analyst estimates for ARR (annual recurring revenue).

ServiceNow achieved the fastest revenue growth among its peers, adding 36 enterprise customers paying more than $1 million annually, bringing the total to 1,933. Shares are unchanged since the report was released, currently trading at $751.

Read our full, actionable report on ServiceNow 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. More broadly, it was a weak quarter for the company, with billings missing analyst estimates and gross margin declining.

Since the report was released, the company’s shares have fallen 4.6% and are currently trading at $35.03.

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

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