The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how sales and marketing software stocks fared in Q2, starting with Freshworks (NASDAQ:FRSH).
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 21 sales and marketing software stocks we track reported a satisfactory Q2. As a group, revenues beat analysts’ consensus estimates by 2.1% while next quarter’s revenue guidance was in line.
In light of this news, share prices of the companies have held steady as they are up 1.6% on average since the latest earnings results.
Freshworks (NASDAQ:FRSH)
Starting as a customer service solution before expanding into a comprehensive software suite, Freshworks (NASDAQ:FRSH) provides AI-powered software-as-a-service solutions that help companies manage customer service, IT support, sales, and marketing functions.
Freshworks reported revenues of $204.7 million, up 17.5% year on year. This print exceeded analysts’ expectations by 2.9%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ EBITDA and annual recurring revenue estimates.
“Freshworks delivered another strong quarter, exceeding our previously provided financial estimates in Q2 with 18% year-over-year revenue growth to $204.7 million, a 29% operating cash flow margin, and 27% adjusted free cash flow margin,” said Dennis Woodside, Chief Executive Officer & President of Freshworks.
Unsurprisingly, the stock is down 7.5% since reporting and currently trades at $12.87.
Is now the time to buy Freshworks? Access our full analysis of the earnings results here, it’s free.
Best Q2: Shopify (NASDAQ:SHOP)
Starting with just three people selling snowboards online in 2004, Shopify (NYSE:SHOP) provides a comprehensive platform that enables merchants of all sizes to create, manage and grow their businesses across multiple sales channels.
Shopify reported revenues of $2.68 billion, up 31.1% year on year, outperforming analysts’ expectations by 5.2%. The business had an exceptional quarter with a solid beat of analysts’ gross merchandise volume estimates and an impressive beat of analysts’ EBITDA estimates.
Shopify delivered the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 13.9% since reporting. It currently trades at $144.80.
Is now the time to buy Shopify? Access our full analysis of the earnings results here, it’s free.
Slowest Q2: AppLovin (NASDAQ:APP)
Sitting at the crossroads of the mobile advertising ecosystem with over 200 free-to-play games in its portfolio, AppLovin (NASDAQ:APP) provides software solutions that help mobile app developers market, monetize, and grow their apps through AI-powered advertising and analytics tools.
AppLovin reported revenues of $1.26 billion, up 16.5% year on year, falling short of analysts’ expectations by 1.2%. It was a slower quarter as it posted revenue guidance for next quarter slightly missing analysts’ expectations.
AppLovin delivered the weakest performance against analyst estimates in the group. Interestingly, the stock is up 45.8% since the results and currently trades at $570.16.
Read our full analysis of AppLovin’s results here.
HubSpot (NYSE:HUBS)
Born from the idea that traditional interruptive marketing was becoming less effective, HubSpot (NYSE:HUBS) provides an integrated platform that helps businesses attract, engage, and manage customer relationships through marketing, sales, service, and content management tools.
HubSpot reported revenues of $760.9 million, up 19.4% year on year. This result beat analysts’ expectations by 2.9%. Overall, it was a strong quarter as it also recorded a solid beat of analysts’ billings estimates and an impressive beat of analysts’ EBITDA estimates.
The company added 9,724 customers to reach a total of 267,982. The stock is up 1.1% since reporting and currently trades at $496.
Read our full, actionable report on HubSpot here, it’s free.
Sprout Social (NASDAQ:SPT)
Born from the recognition that businesses needed a centralized way to handle their growing social media presence, Sprout Social (NASDAQ:SPT) provides a comprehensive software platform that helps businesses manage, analyze, and optimize their presence across various social media networks.
Sprout Social reported revenues of $111.8 million, up 12.5% year on year. This print surpassed analysts’ expectations by 0.8%. However, it was a slower quarter as it logged EPS guidance for next quarter missing analysts’ expectations significantly and a significant miss of analysts’ billings estimates.
The company added 136 enterprise customers paying more than $10,000 annually to reach a total of 9,517. The stock is down 9.7% since reporting and currently trades at $14.48.
Read our full, actionable report on Sprout Social 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.
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