As the craze of earnings season draws to a close, here's a look back at some of the most exciting (and some less so) results from Q1. Today, we are looking at software development stocks, starting with Akamai (NASDAQ:AKAM).
As legendary VC investor Marc Andreessen says, "Software is eating the world", and it touches virtually every industry. That drives increasing demand for tools helping software developers do their jobs, whether it be monitoring critical cloud infrastructure, integrating audio and video functionality, or ensuring smooth content streaming.
The 11 software development stocks we track reported a slower Q1; on average, revenues beat analyst consensus estimates by 1.7%. while next quarter's revenue guidance was in line with consensus. Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. The start of 2024 has been a different story as mixed signals have led to market volatility, and while some of the software development stocks have fared somewhat better than others, they collectively declined, with share prices falling 1.1% on average since the previous earnings results.
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 $987 million, up 7.8% year on year, in line with analysts' expectations. Overall, it was a weak quarter for the company with underwhelming revenue guidance for the next quarter.
"We are pleased with our continuing execution on our long-term strategy to drive revenue growth in our security and compute solutions," said Dr. Tom Leighton, Akamai's Chief Executive Officer.
Akamai delivered the weakest full-year guidance update of the whole group. The stock is down 6.9% since reporting and currently trades at $95.50.
Read our full report on Akamai here, it's free.
Best Q1: Datadog (NASDAQ:DDOG)
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 $611.3 million, up 26.9% year on year, outperforming analysts' expectations by 3.3%. It was a strong quarter for the company with an impressive beat of analysts' ARR (annual recurring revenue) estimates and accelerating growth in large customers.
Although it had a great quarter compared its peers, the market seems unhappy with the results as the stock is down 4.7% since reporting. It currently trades at $120.99.
Is now the time to buy Datadog? Access our full analysis of the earnings results here, it's free.
Weakest Q1: F5 (NASDAQ:FFIV)
Initially started as a hardware appliances company in the late 1990s, F5 (NASDAQ:FFIV) makes software that helps large enterprises ensure their web applications are always available by distributing network traffic and protecting them from cyberattacks.
F5 reported revenues of $681.4 million, down 3.1% year on year, in line with analysts' expectations. It was a weak quarter for the company with underwhelming revenue guidance for the next quarter and a miss of analysts' billings estimates.
F5 posted the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 4.6% since the results and currently trades at $173.73.
Read our full analysis of F5'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 $169.2 million, up 33.3% year on year, surpassing analysts' expectations by 1.9%. Zooming out, it was a weak quarter for the company with a miss of analysts' billings estimates and a miss of analysts' ARR (annual recurring revenue) estimates.
GitLab achieved the fastest revenue growth among its peers. The stock is up 14.4% since reporting and currently trades at $53.90.
Read our full, actionable report on GitLab here, it's free.
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 $380.8 million, up 21.1% year on year, surpassing analysts' expectations by 1.4%. Taking a step back, it was a mixed quarter for the company with an impressive beat of analysts' billings estimates but management forecasting growth to slow.
The stock is down 6.6% since reporting and currently trades at $43.37.
Read our full, actionable report on Dynatrace here, it's free.
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