Vertical Software: Insights into the Recent Earnings Season

The end of an earnings season provides investors with the opportunity to discover new stocks and evaluate companies’ adaptability to the current business environment. Let's consider how Olo and other companies in the vertical software space performed in the second quarter. In a world increasingly dominated by software, the demand for industry-specific solutions that optimize individual work processes is rising. These so-called vertical software solutions are particularly relevant for industries with specific requirements such as life sciences, education, or banking. The 14 companies we are monitoring in this segment all reported strong figures in the second quarter—revenues exceeded analyst estimates by an average of 4.1%, and the outlook for the next quarter remained within expectations. Despite this positive news, the stock prices of the companies involved remained stable, showing little change since the latest quarterly results. This is also reflected in the results of Olo, which processes over two million orders daily with its restaurant technology solutions and recorded a revenue increase of 21.6% in the last quarter. Nevertheless, the stock slightly decreased by 1.1% and is currently at USD 10.26. Upstart, known for its AI-based credit platform, reported an impressive revenue growth of 102%, surpassing expectations. Yet despite these successes, the stock price fell by 26.4% to USD 60.83. Similarly disappointing was the quarter for Agilysys, with the stock price dropping by 11% following weak forecasts. Autodesk, on the other hand, reported revenue growth of 17.1% and a positive price development of 12%. The company impressed with project design solutions for various industries and significantly increased its stock price. Procore Technologies also showed strong performance with a revenue increase of 13.9% and a stock price rise of 2%. Despite the market environment's volatility, vertical software providers still seem to offer good growth opportunities.