Q3 Earnings Highlights: ServiceNow (NYSE:NOW) Vs The Rest Of The Automation Software Stocks

As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q3. Today, we are looking at automation software stocks, starting with ServiceNow (NYSE:NOW).

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 6 automation software stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 4.4% while next quarter’s revenue guidance was in line.

In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.

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 $3.41 billion, up 21.8% year on year. This print exceeded analysts’ expectations by 1.4%. Overall, it was a satisfactory quarter for the company with an impressive beat of analysts’ EBITDA estimates but a significant miss of analysts’ billings estimates.

“This outstanding Q3 performance is the clearest demonstration yet that ServiceNow is the AI platform for business transformation,” said ServiceNow Chairman and CEO Bill McDermott.

ServiceNow delivered the weakest performance against analyst estimates of the whole group. Unsurprisingly, the stock is down 8.4% since reporting and currently trades at $835.24.

Is now the time to buy ServiceNow? Access our full analysis of the earnings results here, it’s free for active Edge members.

Best Q3: 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 a solid beat of analysts’ billings estimates and an impressive beat of analysts’ EBITDA estimates.

Pegasystems delivered the biggest analyst estimates beat among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 4.3% since reporting. It currently trades at $54.62.

Is now the time to buy Pegasystems? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: 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 $42.05 million, up 67.6% year on year, exceeding analysts’ expectations by 2.7%. Still, it was a softer quarter as it posted a significant miss of analysts’ EBITDA estimates and a miss of analysts’ billings estimates.

As expected, the stock is down 20.9% since the results and currently trades at $11.37.

Read our full analysis of SoundHound AI’s results here.

Appian (NASDAQ:APPN)

Powering billions of transactions daily since its founding in 1999, Appian (NASDAQ:APPN) provides a low-code platform that helps businesses automate complex processes and operationalize artificial intelligence without extensive programming knowledge.

Appian reported revenues of $187 million, up 21.4% year on year. This result surpassed analysts’ expectations by 7.4%. It was a very strong quarter as it also recorded an impressive beat of analysts’ billings estimates and a solid beat of analysts’ EBITDA estimates.

The stock is up 41.2% since reporting and currently trades at $41.40.

Read our full, actionable report on Appian 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 $77.67 billion, up 18.4% year on year. This print beat analysts’ expectations by 2.9%. Overall, it was a very strong quarter as it also logged an impressive beat of analysts’ revenue estimates and a solid beat of analysts’ operating income estimates.

The stock is down 6.7% since reporting and currently trades at $507.32.

Read our full, actionable report on Microsoft here, it’s free for active Edge members.

Market Update

The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.

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