Let’s dig into the relative performance of PTC (NASDAQ: PTC) and its peers as we unravel the now-completed Q3 design software earnings season.

The demand for rich, interactive 2D, 3D, VR and AR experiences is growing, and while the ubiquitous metaverse might still be more of a buzzword than a real thing, what is real is the demand for the tools to create these experiences, whether they are games, 3D tours or interactive movies.

The 5 design software stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 5.8% while next quarter’s revenue guidance was in line.

While some design software stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 2.7% since the latest earnings results.

PTC (NASDAQ: PTC)

Originally known as Parametric Technology Corporation until its 2013 rebranding, PTC (NASDAQ: PTC) provides software that helps manufacturers design, develop, and service physical products through digital solutions for CAD, PLM, ALM, and SLM.

PTC reported revenues of $893.8 million, up 42.7% year on year. This print exceeded analysts’ expectations by 18.7%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ billings estimates and a solid beat of analysts’ EBITDA estimates.

"Q4 capped a year of solid execution and focus. The divestiture of Kepware and ThingWorx will sharpen our portfolio around CAD, PLM, ALM, and SLM – the foundation of our Intelligent Product Lifecycle vision," said Neil Barua, President and CEO, PTC.

PTC pulled off the biggest analyst estimates beat and fastest revenue growth, but had the weakest full-year guidance update of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 8.2% since reporting and currently trades at $174.16.

Is now the time to buy PTC? Access our full analysis of the earnings results here, it’s free for active Edge members.

Best Q3: Unity (NYSE: U)

Powering over half of the world's mobile games and expanding into industries from automotive to architecture, Unity (NYSE: U) provides software tools and services that allow developers to create, run, and monetize interactive 2D and 3D content across multiple platforms.

Unity reported revenues of $470.6 million, up 5.4% year on year, outperforming analysts’ expectations by 4.6%. The business had a very strong quarter with a solid beat of analysts’ billings estimates and an impressive beat of analysts’ EBITDA estimates.

The market seems content with the results as the stock is up 3.6% since reporting. It currently trades at $37.17.

Is now the time to buy Unity? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: Adobe (NASDAQ: ADBE)

Originally named after Adobe Creek that ran behind co-founder John Warnock's house, Adobe (NASDAQ: ADBE) develops software products used for digital content creation, document management, and marketing solutions across desktop, mobile, and cloud platforms.

Adobe reported revenues of $5.99 billion, up 10.7% year on year, exceeding analysts’ expectations by 1.4%. It may have had the worst quarter among its peers, but its results were still good as it also locked in an impressive beat of analysts’ billings estimates and a solid beat of analysts’ EBITDA estimates.

As expected, the stock is down 4.7% since the results and currently trades at $334.51.

Read our full analysis of Adobe’s results here.

Procore Technologies (NYSE: PCOR)

With a mission to build software for the people that build the world, Procore Technologies (NYSE: PCOR) provides cloud-based software that enables owners, contractors, and other stakeholders to collaborate and manage construction projects from any device.

Procore Technologies reported revenues of $338.9 million, up 14.5% year on year. This result topped analysts’ expectations by 3.3%. Overall, it was a strong quarter as it also produced a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ billings estimates.

The company added 122 customers to reach a total of 17,623. The stock is up 5.4% since reporting and currently trades at $75.37.

Read our full, actionable report on Procore Technologies here, it’s free for active Edge members.

Cadence Design Systems (NASDAQ: CDNS)

Powering the chips behind everything from smartphones to AI accelerators for over 35 years, Cadence Design Systems (NASDAQ: CDNS) provides essential computational software, hardware, and intellectual property used by engineers to design and verify advanced electronic systems and semiconductors.

Cadence Design Systems reported revenues of $1.34 billion, up 10.1% year on year. This print beat analysts’ expectations by 0.9%. It was a strong quarter as it also recorded an impressive beat of analysts’ EBITDA estimates and full-year EPS guidance beating analysts’ expectations.

Cadence Design Systems had the weakest performance against analyst estimates among its peers. The stock is down 9.8% since reporting and currently trades at $317.16.

Read our full, actionable report on Cadence Design Systems here, it’s free for active Edge members.

Market Update

In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.

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