As the Q1 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the sales software industry, including Freshworks (NASDAQ: FRSH) and its peers.

Companies need to be able to interact with and sell to their customers as efficiently as possible. This reality coupled with the ongoing migration of enterprises to the cloud drives demand for cloud-based customer relationship management (CRM) software that integrates data analytics with sales and marketing functions.

The 4 sales software stocks we track reported a strong Q1. As a group, revenues beat analysts’ consensus estimates by 2.1% while next quarter’s revenue guidance was in line.

While some sales software stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 2.8% since the latest earnings results.

Best Q1: Freshworks (NASDAQ: FRSH)

Founded in Chennai, India in 2010 with the idea of creating a “fresh” helpdesk product, Freshworks (NASDAQ: FRSH) offers a broad range of software targeted at small and medium-sized businesses.

Freshworks reported revenues of $196.3 million, up 18.9% year on year. This print exceeded analysts’ expectations by 2.1%. Overall, it was a strong quarter for the company with accelerating growth in large customers and a solid beat of analysts’ EBITDA estimates.

“Freshworks had another fantastic quarter, outperforming our previously provided financial estimates in Q1 with revenue growing 19% year-over-year to $196.3 million, operating cash flow margin of 30% and adjusted free cash flow margin of 28%," said Dennis Woodside, Chief Executive Officer & President of Freshworks.

Freshworks achieved the fastest revenue growth of the whole group. The company added 717 enterprise customers paying more than $5,000 annually to reach a total of 23,275. Unsurprisingly, the stock is up 5.6% since reporting and currently trades at $15.15.

Is now the time to buy Freshworks? Access our full analysis of the earnings results here, it’s free.

Salesforce (NYSE: CRM)

Launched in 1999 from a rented one-bedroom apartment in San Francisco by Marc Benioff and his three co-founders, Salesforce (NYSE: CRM) is a software-as-a-service platform that helps companies access, manage, and share sales information such as leads.

Salesforce reported revenues of $9.83 billion, up 7.6% year on year, outperforming analysts’ expectations by 0.8%. The business had a strong quarter with a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ billings estimates.

However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $273.78.

Is now the time to buy Salesforce? Access our full analysis of the earnings results here, it’s free.

Weakest Q1: ZoomInfo (NASDAQ: ZI)

Founded in 2007 as DiscoveryOrg and renamed after a merger in 2019, ZoomInfo (NASDAQ: ZI) is a software as a service product that provides sales departments with access to a database of prospective clients.

ZoomInfo reported revenues of $305.7 million, down 1.4% year on year, exceeding analysts’ expectations by 3.2%. It may have had the worst quarter among its peers, but its results were still good as it also locked in a solid beat of analysts’ billings estimates and an impressive beat of analysts’ annual recurring revenue estimates.

ZoomInfo delivered the biggest analyst estimates beat but had the slowest revenue growth and weakest full-year guidance update in the group. The company added 1 enterprise customers paying more than $100,000 annually to reach a total of 1,868. The stock is flat since the results and currently trades at $10.28.

Read our full analysis of ZoomInfo’s results here.

HubSpot (NYSE: HUBS)

Started in 2006 by two MIT grad students, HubSpot (NYSE: HUBS) is a software-as-a-service platform that helps small and medium-sized businesses market themselves, sell, and get found on the internet.

HubSpot reported revenues of $714.1 million, up 15.7% year on year. This number beat analysts’ expectations by 2%. Overall, it was a strong quarter as it also put up an impressive beat of analysts’ billings estimates and a solid beat of analysts’ EBITDA estimates.

HubSpot scored the highest full-year guidance raise among its peers. The company added 10,319 customers to reach a total of 258,258. The stock is down 15.2% since reporting and currently trades at $558.97.

Read our full, actionable report on HubSpot here, it’s free.

Market Update

As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.

Want to invest in winners with rock-solid fundamentals? Check out our 9 Best Market-Beating Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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