As software development stocks’ Q1 earnings season wraps, let's dig into this quarter's best and worst performers, 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 12 software development stocks we track reported a weaker Q1; on average, revenues beat analyst consensus estimates by 2.07%, while on average next quarter revenue guidance was 1.78% under consensus. Tech multiples have reverted to the historical mean after reaching all time levels in early 2021, but software development stocks held their ground better than others, with the share prices up 11.9% since the previous earnings results, on average.
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 $915.7 million, up 1.33% year on year, in line with analyst expectations. It was a decent quarter for the company, with optimistic revenue guidance for the next quarter.
"Akamai had a strong start to 2023, with both revenue and earnings above our expectations," said Dr. Tom Leighton, Chief Executive Officer.
Akamai delivered the slowest revenue growth of the whole group. The stock is up 11.7% since the results and currently trades at $88.2.
Is now the time to buy Akamai? Access our full analysis of the earnings results here, it's free.
Best Q1: Dynatrace (NYSE:DT)
Founded in Austria in 2005, Dynatrace (NYSE:DT) provides companies with software that allows them to monitor the performance of their full technology stack, from software applications to the infrastructure they run on.
Dynatrace reported revenues of $314.5 million, up 24.5% year on year, beating analyst expectations by 3.23%. It was a strong quarter for the company, with revenue guidance for the next quarter and full year beating analysts' expectations.
Dynatrace scored the highest full year guidance raise among its peers. The stock is up 9.44% since the results and currently trades at $51.25.
Is now the time to buy Dynatrace? Access our full analysis of the earnings results here, it's free.
Weakest Q1: PagerDuty (NYSE:PD)
Started by three former Amazon engineers, PagerDuty (NYSE:PD) is a software as a service platform that helps companies respond to IT incidents fast and make sure that any downtime is minimized.
PagerDuty reported revenues of $103.2 million, up 20.9% year on year, in line with analyst expectations. It was a weak quarter for the company, with revenue guidance for the next quarter and the full year missing analysts' expectations.
PagerDuty had the weakest full year guidance update in the group. The company lost 155 customers and ended up with a total of 15,089. The stock is down 21.5% since the results and currently trades at $21.79.
Read our full analysis of PagerDuty's results here.
F5 Networks (NASDAQ:FFIV)
While the company initially started in the late 90s by selling hardware appliances, these days F5 (NASDAQ:FFIV) is making software that helps large enterprises ensure their web applications are always available, by distributing network traffic and protecting them from cyber attacks.
F5 Networks reported revenues of $703.2 million, up 10.9% year on year, in line with analyst expectations. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter.
The stock is up 4.82% since the results and currently trades at $143.9.
Read our full, actionable report on F5 Networks here, it's free.
HashiCorp (NASDAQ:HCP)
Initially created as a research project at the University of Washington, HashiCorp (NASDAQ:HCP) provides software that helps companies operate their own applications in a multi-cloud environment.
HashiCorp reported revenues of $138 million, up 36.8% year on year, beating analyst expectations by 3.65%. It was a slower quarter for the company, with weak revenue guidance for the next quarter. In addition, full-year guidance was lowered, which is never a good sign and could imply company-specific challenges or a lack of visibility around near-term fundamentals.
The company added 32 enterprise customers paying more than $100,000 annually to a total of 830. The stock is down 20.4% since the results and currently trades at $27.69.
Read our full, actionable report on HashiCorp here, it's free.
The author has no position in any of the stocks mentioned