Yahoo Finance 4 Internet Software Stocks' Q1 Earnings Coming Up: Beat or Miss?
The Zacks Internet Software industry is anticipated to have witnessed a steady performance in the first quarter of 2024, driven by continued demand for digital transformation and the increasing need for remote working amid heightened geopolitical risks, rising inflation and high interest rates.
The rapid adoption of Software-as-a-Service (SaaS) models and the increasing need to secure cloud platforms amid the increasing incidences of cyber-attacks have accelerated demand for software solutions. The demand for AI and Machine Learning is rising due to its ability to simplify solutions, making it easy to use against from digital attacks.
Notable players like Cloudflare NET, Paylocity Holding PCTY, Fortinet FTNT and Workiva WK are likely to have benefited from advertising and subscription revenues in the to-be-reported quarter.
Advertising revenues have diversified revenues and boosted the overall top-line growth of Internet software companies. This has been possible due to the huge traffic to these software companies’ websites on a daily basis. The pay-as-you-go model has been boosting subscription revenues as the need for specialized training is reduced significantly, which lowers expenses, thereby driving profits.
As more businesses shift to hybrid operating environments, the need for tools to monitor cloud-based activities is increasingly becoming important, thus boosting their demand.
The Internet Software space is a vital component of the broader technology sector, which includes 16 broad Zacks sectors within the Zacks Industry classification. Per the latest Earnings Preview, the total earnings of technology companies for first-quarter 2024 are expected to be up 27.1% from the same period last year on 8.7% higher revenues. This compares favorably with total S&P 500 earnings, which are expected to be up 3.8% from the same period last year on 3.7% higher revenues.
Insight Into Key Releases
Ahead of their upcoming first-quarter 2024 earnings releases, let's take a look at the four abovementioned Internet Software stocks. The stocks are scheduled to release their quarterly earnings on May 2.
Per the Zacks model, a company needs to have the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
You can see the complete list of today's Zacks #1 Rank stocks here.
Cloudflare: This global cloud services provider is likely to have generated higher revenues year over year, driven by healthy demand trends. Aggravated cyberattacks, the hybrid working trend and a zero-trust approach, have been aiding it in winning multiple clients and boosting revenues.
In the to-be-reported quarter, Cloudflare unveiled a groundbreaking solution, Magic Cloud Networking, designed to simplify and secure multicloud environments for businesses. All these are likely to have generated incremental revenues in the first quarter.
The Zacks Consensus Estimate for NET’s first-quarter 2024 earnings per share is pegged at 13 cents per share, unchanged over the past 30 days. The Zacks Consensus Estimate for total revenues is pegged at $372.93 million, suggesting 28.52% growth from the year-ago quarter.
The stock’s combination of a Zacks Rank #3 and an Earnings ESP of 0.00% makes surprise prediction difficult. The company’s earnings beat estimates in each of the trailing four quarters, the average surprise being 56.97%.
Cloudflare, Inc. Price and EPS Surprise
Cloudflare, Inc. price-eps-surprise | Cloudflare, Inc. Quote
Paylocity: The company’s quarterly performance is likely to have benefited from better sales execution and sustained investments in technological upgrades and product innovation. Paylocity’s initiative to leverage generative AI and the recent launch of premium offerings like Advanced Scheduling, Learning Management and Market Pay are expected to have driven top-line growth. Paylocity’s focus on improving its presence among existing clients through its robust solutions and superior service has been a driving factor. These are likely to have generated higher revenues in the first quarter.
The Zacks Consensus Estimate for PCTY’s first-quarter 2024 earnings per share is pegged at $1.94 per share, unchanged over the past 30 days. For the March quarter, the Zacks Consensus Estimate for total revenues is pegged at $396.93 million, suggesting 16.8% growth from the year-ago quarter.
The stock’s combination of a Zacks Rank #3 and an Earnings ESP of 0.00% which makes surprise prediction difficult. The company’s earnings outpaced estimates in the trailing four quarters, the average surprise being 22.45%.
Paylocity Holding Corporation Price and EPS Surprise
Paylocity Holding Corporation price-eps-surprise | Paylocity Holding Corporation Quote
Fortinet: Growing demand for small enterprise customers and growth in the company's security subscriptions are likely to have aided FTNT’s performance in the to-be-reported quarter. The rapid adoption of FortiGate-based secure Software-Defined Wide Area Network (SD-WAN) offerings, FortiGuard security subscriptions and FortiCare technical support services is likely to have boosted STM’s performance in the quarter under review. However, growing competition in the IT market is expected to have impacted its prospects negatively in the quarter under discussion. (Read More: Fortinet to Report Q1 Earnings: What's in the Offing?)
The Zacks Consensus Estimate for FTNT’s first-quarter 2024 earnings is pegged at 38 cents per share, unchanged over the past 30 days. The Zacks Consensus Estimate for revenues is pegged at $1.33 billion, suggesting an increase of 5.73% from the year-ago quarter’s reported figure.
The company has an Earnings ESP of 0.00% and carries a Zacks Rank #3, which makes surprise prediction difficult. The company’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 15.65%.
Fortinet, Inc. Price and EPS Surprise
Fortinet, Inc. price-eps-surprise | Fortinet, Inc. Quote
Workiva: The company is expected to have benefited from the strong adoption of the company’s integrated reporting platform. Its growing clientele has been a key catalyst, driving top-line growth. WK’s financial reporting, GRC, and ESG technology are helping its clients adopt its strategic platform. In the to-be-reported quarter, WK expanded its alliance with Deloitte for a new ecosystem’s integrated reporting solution. These factors are likely to have generated higher revenues in the first quarter.
The Zacks Consensus Estimate for WK’s first-quarter 2024 earnings is pegged at 17 cents per share, unchanged over the past 30 days. The Zacks Consensus Estimate for revenues is pegged at $173.85 million, suggesting an increase of 15.75% from the year-ago quarter’s reported figure.
The company has an Earnings ESP of 0.00% and carries a Zacks Rank #3, which makes surprise prediction difficult. The company’s earnings outpaced estimates in three of the trailing four quarters and missed the mark once, the average negative surprise being 379.55%.
Workiva Inc. Price and EPS Surprise
Workiva Inc. price-eps-surprise | Workiva Inc. Quote
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Fortinet, Inc. (FTNT) : Free Stock Analysis Report
Paylocity Holding Corporation (PCTY) : Free Stock Analysis Report
Workiva Inc. (WK) : Free Stock Analysis Report
Cloudflare, Inc. (NET) : Free Stock Analysis Report
