Enterprise software stocks collapse as sector trudges through red Thursday

The enterprise software sector was hemorrhaging during Thursday market trading, as evidenced by the iShares Expanded Tech-Software Sector ETF IGV dropping 3.4%.

During the heart of earnings season, positive results and outlooks offered little relief for the bleeding. For example, the creative software firm Figma FIG surpassed estimates with its third-quarter results and raised its full-year guidance.

"We're raising our full-year non-GAAP operating income outlook to $158 million to $163 million," said Figma CFO Praveer Melwani during the earnings call. He linked the change to Q3 outperformance and "a carry-through of the internal AI efficiencies we recognized this quarter and improvements in our cost to serve our AI products."

However, Figma suffered a freefall of more than 12% by mid-morning trading.

Palantir PLTR plummeted more than 10% despite delivering another quarter of impressive growth across both its government and commercial segments on Monday.

"Because of strong commercial revenue growth, Palantir's commercial top line for the first time exceeded that of the government segment, creating a major inflection point for the enterprise," said Seeking Alpha analyst The Asian Investor. "Yet again, Palantir's management raised its full-year top line and operating income guidance, creating valuation upside for the software and analytics platform."

JFrog FROG, which plans to release its third-quarter results post-market, had plunged 11%.

Not all software was suffering in the heels of its latest earnings. Cybersecurity provider Rapid7 RPD rose nearly 9% after releasing its third-quarter results.

However, other cybersecurity names were getting hammered. The stalwart CrowdStrike CRWD collapsed 8%, Rubrik RBRK and Palo Alto Networks PANW declined 7%, and Fortinet FTNT fell 3%.

Appian APPN popped up 6% after releasing its third quarter results on Thursday morning. Its cloud net annual recurring revenue expansion accelerated to 120% as of September 30 (up from 115% in Q2), marking its strongest expansion rate in more than five years.

Similar enterprise software firms such as ServiceNow NOW and Salesforce CRM were down 3% and 1%, respectively. Oracle ORCL sank 7%. The software titan Microsoft MSFT dipped 2.3%.

Klaviyo KVYO had inched up less than 1% after releasing its third-quarter results on Wednesday evening.

All the major indices were down on Thursday. The benchmark S&P 500 (SP500) fell 3%, the tech-heavy Nasdaq COMP dropped 3.8%, and the Dow Jones DJI was down 2%.