Wrapping up Q1 earnings, we look at the numbers and key takeaways for the sales and marketing software stocks, including Sprout Social (NASDAQ: SPT) and its peers.
The Internet and the exploding amount of data have transformed how businesses interact with, market to, and transact with their customers. Personalization of offerings, e-commerce, targeted advertising and data-empowered sales teams are now table stakes for modern businesses, and sales and marketing software providers are becoming the tools of evolving customer interaction.
The 14 sales and marketing software stocks we track reported a strong Q1. As a group, revenues beat analysts’ consensus estimates by 2.8% while next quarter’s revenue guidance was 1.5% below.
In light of this news, share prices of the companies have held steady as they are up 1.8% on average since the latest earnings results.
Slowest Q1: Sprout Social (NASDAQ: SPT)
Founded by Justyn Howard and Aaron Rankin in 2010, Sprout Social (NASDAQ: SPT) provides a software as a service platform that companies can use to schedule and respond to posts on major social media networks like Twitter, Facebook, Instagram, Youtube and LinkedIn.
Sprout Social reported revenues of $109.3 million, up 12.9% year on year. This print exceeded analysts’ expectations by 1.5%. Overall, it was a strong quarter for the company with EPS guidance for next quarter exceeding analysts’ expectations and a solid beat of analysts’ EBITDA estimates.
“Our team delivered strong results in the first quarter, highlighted by 13% revenue growth, a 21% increase in cRPO, and profitability expansion,” said Ryan Barretto, CEO of Sprout Social.
Interestingly, the stock is up 10.1% since reporting and currently trades at $24.
Is now the time to buy Sprout Social? Access our full analysis of the earnings results here, it’s free.
Best Q1: AppLovin (NASDAQ: APP)
Co-founded by Adam Foroughi, who was frustrated with not being able to find a good solution to market his own dating app, AppLovin (NASDAQ: APP) is both a mobile game studio and provider of marketing and monetization tools for mobile app developers.
AppLovin reported revenues of $1.48 billion, up 40.3% year on year, outperforming analysts’ expectations by 7.3%. The business had a very strong quarter with EBITDA guidance for next quarter exceeding analysts’ expectations and a solid beat of analysts’ EBITDA estimates.
AppLovin scored the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 8.1% since reporting. It currently trades at $328.20.
Is now the time to buy AppLovin? Access our full analysis of the earnings results here, it’s free.
The Trade Desk (NASDAQ: TTD)
Founded by former Microsoft engineers Jeff Green and Dave Pickles, The Trade Desk (NASDAQ: TTD) offers cloud-based software that uses data to help advertisers better plan, place, and target their online ads.
The Trade Desk reported revenues of $616 million, up 25.4% year on year, exceeding analysts’ expectations by 7%. It was a strong quarter as it also locked in a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ billings estimates.
Interestingly, the stock is up 18.3% since the results and currently trades at $70.98.
Read our full analysis of The Trade Desk’s results here.
DoubleVerify (NYSE: DV)
When Oren Netzer saw a digital ad for US-based Target while sitting in his Tel Aviv apartment, he knew there was an unsolved problem, so he started DoubleVerify (NYSE: DV), a provider of advertising solutions to businesses that helps with ad verification, fraud prevention, and brand safety.
DoubleVerify reported revenues of $165.1 million, up 17.2% year on year. This number topped analysts’ expectations by 7.8%. It was a very strong quarter as it also put up an impressive beat of analysts’ EBITDA estimates and EBITDA guidance for next quarter slightly topping analysts’ expectations.
DoubleVerify delivered the biggest analyst estimates beat among its peers. The stock is down 5.6% since reporting and currently trades at $13.31.
Read our full, actionable report on DoubleVerify here, it’s free.
ON24 (NYSE: ONTF)
Started in 1998 as a platform to broadcast press conferences, ON24’s (NYSE: ONTF) software helps organizations organize online webinars and other virtual events and convert prospects into customers.
ON24 reported revenues of $34.73 million, down 7.9% year on year. This print surpassed analysts’ expectations by 1.5%. More broadly, it was a slower quarter as it recorded full-year EPS guidance missing analysts’ expectations.
ON24 had the slowest revenue growth and weakest full-year guidance update among its peers. The stock is up 3% since reporting and currently trades at $4.85.
Read our full, actionable report on ON24 here, it’s free.
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.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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