Markets Fall Again, But These 2 Stocks Are Heading Higher

The stock market didn't seem to draw any inspiration from the long holiday weekend, as continuing concerns about inflation, potential recession, and macroeconomic and geopolitical factors weighed on investor sentiment.

By the end of the day on Tuesday, the Dow Jones Industrial Average (^DJI 0.56%), S&P 500 (^GSPC -0.88%), and Nasdaq Composite (^IXIC -2.05%) all finished lower, and although none of them dropped more than three-quarters of a percent, they continued to show signs of weakness following a solid summer rally.

Data source: Yahoo! Finance.

After the market's regular session ended, however, some positive financial reports from a pair of software stocks  helped to buoy confidence among tech investors. Read on below and find out why investors in Coupa Software (COUP) and Guidewire Software (GWRE -0.24%) were pleased with what their respective companies had to say late Tuesday afternoon.

Coupa de grace

Shares of Coupa Software were up nearly 13% in after-hours trading on Tuesday afternoon. The maker of software to manage business spending enjoyed a strong quarter and pointed the way toward more success in the near future.

Coupa's fiscal second-quarter results for the period ending July 31 were somewhat mixed. On the positive side, sales rose 18% to $211 million, led higher by a 23% rise in subscription-based revenue. Coupa said that a significant number of new customers joined its client ranks, and it expanded its Latin American presence with new offices in Mexico, Brazil, and Colombia. However, adjusted net income was down almost 20% year over year to $16.5 million, leading to adjusted earnings of $0.20 per share.

Still, Coupa investors were willing to look at a brighter time ahead. The software company projected full-year revenue of between $838 million and $844 million, with adjusted earnings likely to weigh in between $0.37 and $0.44 per share. Investors also liked Coupa's authorization of a $100 million stock buyback program, indicating the company's confidence in its stock price.

Coupa shares remain down 75% from where they traded as recently as October 2021, even after today's late rise. If the company can restart its growth engines, then Coupa's stock could have a long way to rebound.

A guiding light

Elsewhere, Guidewire Software's stock rose more than 6% after hours on Tuesday. The insurance cloud software platform specialist's fiscal fourth-quarter financial results didn't paint the rosiest of pictures, but investors seemed pleased with the direction the company is headed.

Guidewire's numbers didn't show amazing strength. Revenue of $245 million was up just 7% year over year, although some of the slowdown reflected a transition away from license-based sales toward recurring revenue. Subscription and support revenue jumped 34% from year-ago levels. However, adjusted net income dropped more than 90% year over year, resulting in adjusted earnings of just $0.03 per share.

However, CEO Mike Rosenbaum was pleased with the progress Guidewire made in transitioning its insurer clients to cloud-based core systems. Guidewire won 16 cloud deals just in the fiscal fourth quarter alone, expanding relationships with existing customers and bringing on new ones as well.

Investors also liked Guidewire's guidance. The company expects fiscal 2023 revenue of between $885 million and $895 million, with annualized recurring revenue making up about 85% of its overall sales. That would indicate the long-term success of Guidewire's transition.

Guidewire has come a long way since the beginning of 2022, and investors are excited about its strategic vision. If the company can keep serving insurance providers well, then it could enjoy plenty of growth in the years to come.