As software development stocks’ Q4 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 14 software development stocks we track reported a slower Q4; on average, revenues beat analyst consensus estimates by 3.04%, while on average next quarter revenue guidance was 1.28% under consensus. There has been a stampede out of high valuation technology stocks as raising interest rates encourage investors to value profits over growth again, but software development stocks held their ground better than others, with share prices down 2.57% 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 $927.8 million, up 2.48% year on year, beating analyst expectations by 2.54%. It was a weaker quarter for the company, with slow revenue growth and a decline in gross margin compared to the same quarter last year.
"We are pleased with our fourth quarter results which were driven by strong seasonal traffic, the continued success of our security solutions and the growth of our cloud computing solutions", said Dr. Tom Leighton, Akamai's chief executive officer.
The stock is down 12.8% since the results and currently trades at $76.55.
Read our full report on Akamai here, it's free.
Best Q4: Sumo Logic (NASDAQ:SUMO)
Founded in 2010 by Christian Beegden who went from driving a cab in Germany to landing an internship at Amazon, Sumo Logic (NASDAQ:SUMO) is software as a service data analytics platform that helps companies get insight into what is happening in their servers and applications.
Sumo Logic reported revenues of $79 million, up 27.3% year on year, beating analyst expectations by 6.41%. It was a very strong quarter for the company, with a significant improvement in gross margin and a solid beat of analyst estimates.
Sumo Logic pulled off the highest full year guidance raise among its peers. The stock is up 66.3% since the results and currently trades at $11.97.
Sumo has agreed to be sold to private equity firm Francisco Partners for about $1.7 billion.
Is now the time to buy Sumo Logic? Access our full analysis of the earnings results here, it's free.
Weakest Q4: Agora (NASDAQ:API)
Founded in 2014 by former engineers at WebEx and based in China, Agora (NASDAQ:API) provides a cloud platform that makes it easy for developers to integrate real-time audio and video functionalities in their apps.
Agora reported revenues of $40.1 million, down 0.66% year on year, missing analyst expectations by 1.12%. It was a weak quarter for the company, with a full year guidance missing analysts' expectations and slow revenue growth.
Agora had the weakest performance against analyst estimates and slowest revenue growth in the group. The company added 79 customers to a total of 3,066. The stock is down 8.62% since the results and currently trades at $3.5.
Read our full analysis of Agora's results here.
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 $122.9 million, up 58% year on year, beating analyst expectations by 2.77%. It was a weaker quarter for the company, with revenue guidance for the next quarter and the full year missing analysts' expectations.
GitLab delivered the fastest revenue growth but had the weakest full year guidance update among the peers. The stock is down 26% since the results and currently trades at $33.
Read our full, actionable report on GitLab here, it's free.
Twilio (NYSE:TWLO)
Founded in 2008 by Jeff Lawson, a former engineer at Amazon, Twilio (NYSE:TWLO) is a software as a service platform that makes it really easy for software developers to use text messaging, voice calls and other forms of communication in their apps.
Twilio reported revenues of $1.02 billion, up 21.6% year on year, beating analyst expectations by 2.43%. It was a slower quarter for the company, with underwhelming revenue guidance for the next quarter and a decline in net revenue retention rate.
The company added 10,000 customers to a total of 290,000. The stock is down 3.3% since the results and currently trades at $63.89.
Read our full, actionable report on Twilio here, it's free.
The author has no position in any of the stocks mentioned