Software stocks are expected to see a robust second-quarter 2020 earnings season driven by solid demand for remote working and learning technology amid the coronavirus pandemic. The COVID-19-led social-distancing protocols, quarantines and lockdowns, along with rising fears of contracting the virus is, have been spurring demand for team collaboration tools and online services.
The work-from-home and online-learning trend is anticipated to have benefited Zoom Video and Microsoft. The team collaboration tools provider Atlassian’s TEAM fourth-quarter fiscal 2020 revenues and earnings climbed 29% and 25%, respectively, year on year.
Software Stocks’ Upcoming Earnings Releases
Investors interested in the software industry are eagerly awaiting the earnings releases from players like LivePerson LPSN, Twilio TWLO, Paycom PAYC, New Relic NEWR, and Avalara AVLR on Aug 4.
LivePerson’s second-quarter performance is expected to have benefited from the rising demand for remote working and team collaboration tools amid the pandemic-induced global lockdown. The growing adoption of the company’s cloud-based solutions and massive digitalization of work from organizations, big or small, is likely to have aided its quarterly performance.
Moreover, LivePerson currently carries a Zacks Rank #3 (Hold) and has an Earnings ESP of 23.81%.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. Notably, per the Zacks model, the combination of a positive Earnings ESP, and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3, increases the odds of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.
LivePerson, Inc. Price and EPS Surprise
LivePerson, Inc. price-eps-surprise | LivePerson, Inc. Quote
Twilio’s June-end quarter performance is likely to have gained from an increasing clientele and the Sendgrid buyout. Growing adoption of Twilio Flex is also anticipated to have been a tailwind. In addition, Twilio’s efforts to fortify its global footprint will likely reflect on the quarterly results.
Nonetheless, rising investments in lower-margin international regions might have dampened its profitability during the soon-to-be-reported quarter. Also, the firm is perking up investments in its systems and infrastructure, go-to-market team and Flex, as well as in R&D, which is likely to have clipped the company’s profitability during the same period. (Read more: Twilio to Report Q2 Earnings: What's in the Cards?)
However, Twilio’s combination of a Zacks Rank #2 and an Earnings ESP of 0.00% lowers chances of an earnings beat this season.
Twilio Inc. Price and EPS Surprise
Twilio Inc. price-eps-surprise | Twilio Inc. Quote
Paycom’s expanding foothold among larger companies makes us optimistic about its upcoming quarterly results. Also, the launch of Ask Here is anticipated to have been conducive to its performance during the period in discussion. Additionally, Paycom’s performance during the April-June period is likely to have benefited from new business wins and its high-margin recurring revenue business.
Nonetheless, the company’s quarterly performance might have been hurt by the unexpected rate cuts and spike in unemployment levels due to the economic and business disruptions caused by the pandemic. Notably, some of Paycom’s businesses are directly related to the number of headcounts at its client offices. (Read more: Paycom to Report Q2 Earnings: What's in the Offing?)
However, Paycom carries a Zacks Rank #4 (Sell) and has an Earnings ESP of -11.23%, which lowers the possibilities of an earnings beat this time around.
Paycom Software, Inc. Price and EPS Surprise
Paycom Software, Inc. price-eps-surprise | Paycom Software, Inc. Quote
New Relic’s first-quarter fiscal 2021 results are likely to reflect benefits from the expansion of its installed base on the increased usage, expanded application coverage and cross-selling opportunities. The additions of new features like New Relic logs, serverless, metrics, traces and programmability are also expected to have boosted adoption of the firm’s unified New Relic One platform that enables customers to derive meaningful insights from complex data, and accelerate business processes.
Nevertheless, the stock’s combination of a Zacks Rank #3 and an Earnings ESP of 0.00% lowers the chances of an earnings beat for the quarter under review.
New Relic, Inc. Price and EPS Surprise
New Relic, Inc. price-eps-surprise | New Relic, Inc. Quote
Avalara AVLR is a provider of cloud-based tax compliance solutions. It offers businesses of all sizes achieve compliance with transaction taxes including sales and use, VAT, excise, communications and other tax types. The company’s second-quarter performance is likely to have benefited from strong demand for cloud-based tax compliance solutions amid the pandemic.
The stock, however, carries a Zacks Rank 2 and has an Earnings ESP of 0.00%, which dims the possibilities of an earnings beat this season.
Avalara, Inc. Price and EPS Surprise
Avalara, Inc. price-eps-surprise | Avalara, Inc. Quote
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Paycom Software, Inc. (PAYC): Free Stock Analysis Report
Atlassian Corporation PLC (TEAM): Free Stock Analysis Report
LivePerson, Inc. (LPSN): Free Stock Analysis Report
Twilio Inc. (TWLO): Free Stock Analysis Report
New Relic, Inc. (NEWR): Free Stock Analysis Report
Avalara, Inc. (AVLR): 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.