Can These 4 Internet Software Stocks Hit Q1 Earnings Targets?

Internet Software companies are likely to have witnessed strong performance driven by a continuous surge in demand for Software as a Service or SaaS-based solutions. SaaS-based offerings are seeing wide traction in areas such as healthcare diagnosis, learning and education and are also feeding the growing trend of remote working set-ups.

Moreover, the rapid shift from VPN-based cybersecurity solutions and the growing adoption of zero-trust cybersecurity applications among the clients of these companies are also adding to the prospects of Internet software providers. The companies from this industry are also benefiting from the increasing adoption of the Internet of Things, generative artificial intelligence and augmented and virtual reality.

The industry is likely to have benefited from increased traction in usage plans like the Pay-As-You-Go Model and infrastructure shifts like the shift toward cloud-based models. The Pay-As-You-Go model enables organizations to scale as per their increasing needs to expand, whereas the cloud infrastructure makes it easier to deploy software easily without having to set up the bulky hardware for them.

However, the cloud comes with its own demerits, too. Cloud infrastructure has given rise to new loopholes that cyberattackers are breaching through. New and advanced concepts like zero-trust are emerging to protect the companies’ critical information from attackers.

Internet Software companies are also benefiting from the shift from old VPN-based and firewall solutions to zero-trust solutions that secure data in real time.

Nonetheless, Internet software companies’ near-term prospects might be hurt by softening IT spending. Enterprises are postponing their large IT spending plans due to a weakening global economy amid ongoing macroeconomic and geopolitical issues.

Amid the ongoing situation, investors interested in the internet software industry are eagerly awaiting the earnings releases of players like Paycom Software PAYC, Dayforce, Inc. DAY, Freshworks FRSH and Fastly FSLY, scheduled to be released on May 1.

Our quantitative model predicts an earnings beat for a company if it has a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). This combination increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Let’s delve deeper.

Paycom will report first-quarter 2024 earnings. It has topped the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 5.9%. However, our proven model does not conclusively predict an earnings beat for PAYC this earnings season as it has an Earnings ESP of 0.00% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Paycom’s revenues is pegged at $495.9 million, which indicates a 9.8% increase from the year-ago quarter. The consensus estimate for earnings is pegged at $2.43 per share, which suggests a year-over-year decline of 1.2%.

Paycom Software, Inc. Price and EPS Surprise

Paycom Software, Inc. Price and EPS Surprise

Paycom Software, Inc. price-eps-surprise | Paycom Software, Inc. Quote

Dayforce will report first-quarter 2024 results. It surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 22%. However, our proven model does not conclusively predict an earnings beat for DAY this earnings season as it has an Earnings ESP of 0.00% and a Zacks Rank #3 at present.

The Zacks Consensus Estimate for Dayforce’s revenues is pegged at $426.2 million, which indicates a 15% increase from the year-ago quarter. The consensus estimate for the bottom line is pegged at 45 cents per share, which implies a year-over-year decrease of 45.2%.

Freshworks is set to report first-quarter 2024 results. It topped the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 242.5%. However, our proven model does not conclusively predict an earnings beat for FRSH this earnings season as it has an Earnings ESP of 0.00% and a Zacks Rank #3 at present.

The Zacks Consensus Estimate for Freshworks’ revenues is pegged at $163.5 million, which indicates an 18.8% increase from the year-ago quarter. The consensus estimate for the bottom line is pegged at 8 cents per share, which is an improvement of 166.7% year over year.

Freshworks Inc. Price and EPS Surprise

Freshworks Inc. Price and EPS Surprise

Freshworks Inc. price-eps-surprise | Freshworks Inc. Quote

Fastly will release its first-quarter 2024 results. It surpassed the Zacks Consensus Estimate in all the preceding four quarters, the average surprise being 58.57%. Our proven model does not conclusively predict an earnings beat for FSLY this earnings season as it has an Earnings ESP of +23.91% but has a Zacks Rank #4 (Sell) at present.

The Zacks Consensus Estimate for FSLY’s revenues is pegged at $133 million, which indicates a 13.1% increase from the year-ago quarter. The consensus estimate for the bottom line is pegged at a loss of 7 cents per share, which is narrower than the year-ago quarter’s loss of 9 cents per share.

Fastly, Inc. Price and EPS Surprise

Fastly, Inc. Price and EPS Surprise

Fastly, Inc. price-eps-surprise | Fastly, Inc. Quote

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Freshworks Inc. (FRSH) : Free Stock Analysis Report

Paycom Software, Inc. (PAYC) : Free Stock Analysis Report

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Dayforce, Inc. (DAY) : Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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