Wrapping up Q3 earnings, we look at the numbers and key takeaways for the software development stocks, including Akamai (NASDAQ:AKAM) and its peers.
Software is eating the world, as Marc Andreessen says, and there is virtually no industry left that has been untouched by it. That in turn drives increasing demand for tools that help software developers do their jobs, whether it is monitoring critical cloud infrastructure, integrating audio and video functionality or ensuring smooth streaming of content.
The 13 software development stocks we track reported a strong Q3; on average, revenues beat analyst consensus estimates by 5.41%, while on average next quarter revenue guidance was 3.29% above consensus. The technology sell-off has been putting pressure on stocks since November and software development stocks have not been spared, with share price down 24.1% since earnings, on average.
Slowest Q3: Akamai (NASDAQ:AKAM)
Founded in 1999 by two engineers from MIT, Akamai (NASDAQ:AKAM) provides software for organizations to efficiently deliver web content to their customers.
Akamai reported revenues of $860.3 million, up 8.51% year on year, in line with analyst expectations. It was an OK quarter for the company, narrowly beating both EPS and revenue estimates.
"Akamai delivered another excellent quarter, highlighted by the continued very strong growth of our security business, which now accounts for nearly 40% of our overall revenue," said Dr. Tom Leighton, Akamai's Chief Executive Officer.
Akamai delivered the smallest earnings surprise and slowest revenue growth of the whole group. More conservatively valued than most of its competitors, the stock is up 7.09% since the results and currently trades at $112.59.
Best Q3: GitLab (NASDAQ:GTLB)
Founded as an open-source project in 2011, GitLab (NASDAQ:GTLB) is a leading software development tools platform.
GitLab reported revenues of $66.8 million, up 51.3% year on year, beating analyst expectations by 12.8%. It was a strong quarter for the company, with an impressive beat of analyst estimates and a very optimistic guidance for the next quarter.
The stock is down 33.1% since the results and currently trades at $59.75.
Started in 1999 by David Morken who was later joined by Henry Kaestner as co-founder in 2001, Bandwidth (NASDAQ:BAND) provides thousands of customers with a software platform that uses its own global network to provide phone numbers, voice, and text connectivity.
Bandwidth reported revenues of $130.6 million, up 54.1% year on year, beating analyst expectations by 3.61%. It was a weaker quarter for the company, with an exceptional revenue growth but an underwhelming revenue guidance for the next quarter.
Bandwidth had the weakest full year guidance update in the group. The company added 122 customers to a total of 3,173. The stock is down 27.8% since the results and currently trades at $59.88.
Named after a database the founders had to painstakingly look after at their previous company, Datadog (NASDAQ:DDOG) is a software as a service platform that makes it easier to monitor cloud infrastructure and applications.
Datadog reported revenues of $270.4 million, up 74.8% year on year, beating analyst expectations by 9.14%. It was an impressive quarter for the company, with a very optimistic guidance for the next quarter.
Datadog scored the fastest revenue growth among the peers. The company added 190 enterprise customers paying more than $100,000 annually to a total of 1,800. The stock is down 24.7% since the results and currently trades at $125.59.
Founded by two grad students of Harvard Business School, Cloudflare (NYSE:NET) is a software as a service platform that helps improve security, reliability and loading times of internet applications and websites.
Cloudflare reported revenues of $172.3 million, up 50.9% year on year, beating analyst expectations by 4.04%. It was a very strong quarter for the company, with an exceptional revenue growth.
The stock is down 55.9% since the results and currently trades at $88.50.
The author has no position in any of the stocks mentioned