Looking back on specialized technology stocks’ Q3 earnings, we examine this quarter’s best and worst performers, including Arlo Technologies (NYSE:ARLO) and its peers.
Companies in this sector, especially if they invest wisely, could see demand tailwinds as the world moves towards more IoT (Internet of Things), automation, and analytics. Enterprises across most industries will balk at taking these journeys solo and will enlist companies with expertise and scale in these areas. However, headwinds could include rising competition from larger technology firms, as digitization lowers barriers to entry in the space. Additionally, companies in the space will likely face evolving regulatory scrutiny over data privacy, particularly for surveillance and security technologies. This could make companies have to continually pivot and invest.
The 8 specialized technology stocks we track reported a very strong Q3. As a group, revenues beat analysts’ consensus estimates by 3.2% while next quarter’s revenue guidance was in line.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
Arlo Technologies (NYSE:ARLO)
Originally spun off from networking equipment maker Netgear in 2018, Arlo Technologies (NYSE:ARLO) provides cloud-based smart security devices and subscription services that help consumers and businesses monitor and protect their homes, properties, and loved ones.
Arlo Technologies reported revenues of $139.5 million, up 1.4% year on year. This print exceeded analysts’ expectations by 0.6%. Overall, it was a strong quarter for the company with a solid beat of analysts’ EPS guidance for next quarter estimates and a beat of analysts’ EPS estimates.
“Arlo again delivered another outstanding quarter fueled by our services business. Our ARR accelerated to $323 million, up about 34% year over year, driving non-GAAP subscriptions and services gross margin to over 85%, a record level and a spectacular increase of 770 basis points year over year,” said Matthew McRae, Chief Executive Officer of Arlo Technologies.
Arlo Technologies delivered the slowest revenue growth of the whole group. Unsurprisingly, the stock is down 6.7% since reporting and currently trades at $15.79.
Best Q3: Napco (NASDAQ:NSSC)
Protecting everything from schools to government facilities since 1969, Napco Security Technologies (NASDAQ:NSSC) manufactures electronic security devices, access control systems, and communication services for intrusion and fire alarm systems.
Napco reported revenues of $49.17 million, up 11.7% year on year, outperforming analysts’ expectations by 4.8%. The business had an incredible quarter with a beat of analysts’ EPS estimates and an impressive beat of analysts’ revenue estimates.
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 4.2% since reporting. It currently trades at $42.25.
Is now the time to buy Napco? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q3: Cognex (NASDAQ:CGNX)
Founded in 1981 when computer vision was in its infancy, Cognex (NASDAQ:CGNX) develops machine vision systems and software that help manufacturers and logistics companies automate quality inspection and tracking of products.
Cognex reported revenues of $276.9 million, up 18% year on year, exceeding analysts’ expectations by 5.2%. It was a satisfactory quarter as it also posted an impressive beat of analysts’ revenue estimates but a significant miss of analysts’ full-year EPS guidance estimates.
As expected, the stock is down 19.9% since the results and currently trades at $38.
Read our full analysis of Cognex’s results here.
PAR Technology (NYSE:PAR)
Originally founded in 1968 as a defense contractor for the U.S. government, PAR Technology (NYSE:PAR) provides cloud-based software, payment processing, and hardware solutions that help restaurants manage everything from point-of-sale to customer loyalty programs.
PAR Technology reported revenues of $119.2 million, up 23.2% year on year. This result beat analysts’ expectations by 5.8%. It was a very strong quarter as it also recorded a beat of analysts’ EPS estimates and a solid beat of analysts’ revenue estimates.
PAR Technology pulled off the biggest analyst estimates beat and fastest revenue growth among its peers. The stock is up 17.4% since reporting and currently trades at $38.99.
Read our full, actionable report on PAR Technology here, it’s free for active Edge members.
Crane NXT (NYSE:CXT)
Born from a corporate transformation completed in 2023, Crane NXT (NYSE:CXT) provides specialized technology solutions for payment processing, banknote security, and authentication systems for financial institutions and businesses.
Crane NXT reported revenues of $445.1 million, up 10.3% year on year. This print surpassed analysts’ expectations by 3.6%. Overall, it was a strong quarter as it also produced an impressive beat of analysts’ organic revenue estimates and a solid beat of analysts’ revenue estimates.
The stock is down 4.4% since reporting and currently trades at $61.33.
Read our full, actionable report on Crane NXT here, it’s free for active Edge members.
Market Update
Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.
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