As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the data & business process services industry, including CoStar (NASDAQ:CSGP) and its peers.
A combination of increasing reliance on data and analytics across various industries and the desire for cost efficiency through outsourcing could mean that companies in this space gain. As functions such as payroll, HR, and credit risk assessment rely on more digitization, key players in the data & business process services industry could be increased demand. On the other hand, the sector faces headwinds from growing regulatory scrutiny on data privacy and security, with laws like GDPR and evolving U.S. regulations potentially limiting data collection and monetization strategies. Additionally, rising cyber threats pose risks to firms handling sensitive personal and financial information, creating outsized headline risk when things go wrong in this area.
The 9 data & business process services stocks we track reported a mixed Q2. As a group, revenues beat analysts’ consensus estimates by 1.6% while next quarter’s revenue guidance was 0.6% below.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
CoStar (NASDAQ:CSGP)
With a research department that makes over 10,000 property updates daily to its 35-year-old database, CoStar Group (NASDAQ:CSGP) provides comprehensive real estate data, analytics, and online marketplaces for commercial and residential properties in the U.S. and U.K.
CoStar reported revenues of $781.3 million, up 15.3% year on year. This print exceeded analysts’ expectations by 1.2%. Despite the top-line beat, it was still a slower quarter for the company with a significant miss of analysts’ EPS guidance for next quarter estimates.
CoStar achieved the fastest revenue growth of the whole group. Unsurprisingly, the stock is up 5% since reporting and currently trades at $89.26.
Read our full report on CoStar here, it’s free.
Best Q2: CSG (NASDAQ:CSGS)
Powering billions of critical customer interactions annually, CSG Systems (NASDAQ:CSGS) provides cloud-based software platforms that help companies manage customer interactions, process payments, and monetize their services.
CSG reported revenues of $297.1 million, up 2.3% year on year, outperforming analysts’ expectations by 1.9%. The business had a very strong quarter with full-year revenue guidance exceeding analysts’ expectations and a beat of analysts’ EPS estimates.
CSG achieved the highest full-year guidance raise among its peers. However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $62.54.
Is now the time to buy CSG? Access our full analysis of the earnings results here, it’s free.
Slowest Q2: Broadridge (NYSE:BR)
Processing over $10 trillion in equity and fixed income trades daily and managing proxy voting for over 800 million equity positions, Broadridge Financial Solutions (NYSE:BR) provides technology-driven solutions that power investing, governance, and communications for banks, broker-dealers, asset managers, and public companies.
Broadridge reported revenues of $2.07 billion, up 6.2% year on year, in line with analysts’ expectations. It was a slower quarter as it posted revenue guidance for next quarter meeting analysts’ expectations.
Interestingly, the stock is up 7.9% since the results and currently trades at $268.
Read our full analysis of Broadridge’s results here.
EXL (NASDAQ:EXLS)
Originally founded as an outsourcing company in 1999 before evolving into a technology-focused enterprise, EXL (NASDAQ:EXLS) provides data analytics and AI-powered digital operations solutions that help businesses transform their operations and make better decisions.
EXL reported revenues of $514.5 million, up 14.7% year on year. This result surpassed analysts’ expectations by 1.6%. Overall, it was a strong quarter as it also produced a beat of analysts’ EPS estimates and full-year EPS guidance in line with analysts’ estimates.
The stock is up 2.4% since reporting and currently trades at $43.20.
Read our full, actionable report on EXL here, it’s free.
Verisk (NASDAQ:VRSK)
Processing over 2.8 billion insurance transaction records annually through one of the world's largest private databases, Verisk Analytics (NASDAQ:VRSK) provides data, analytics, and technology solutions that help insurance companies assess risk, detect fraud, and make better business decisions.
Verisk reported revenues of $772.6 million, up 7.8% year on year. This number met analysts’ expectations. Aside from that, it was a mixed quarter as it also recorded a beat of analysts’ EPS estimates but a miss of analysts’ full-year EPS guidance estimates.
Verisk had the weakest performance against analyst estimates among its peers. The stock is down 7.8% since reporting and currently trades at $271.11.
Read our full, actionable report on Verisk here, it’s free.
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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