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Reflecting On Software Development Stocks’ Q3 Earnings: Agora (NASDAQ:API)


Jabin Bastian /
2022/01/25 6:05 am EST
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As we reflect back on the just completed Q3 software development sector earnings season, we dig into the relative performance of Agora (NASDAQ:API) 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 21.8% since earnings, on average.

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 $45 million, up 46% year on year, beating analyst expectations by 13.5%. It was a strong quarter for the company, with a significant improvement in gross margin and an impressive beat of analyst estimates.

“We delivered another quarter of strong revenue growth, underpinned by the continued adoption of our real-time engagement platform by developers,” said Tony Zhao, founder, chairman and CEO of Agora.

Agora Total Revenue

Agora achieved the strongest analyst estimates beat of the whole group. The company added 115 customers to a total of 2,564. The stock is down 57.9% since the results and currently trades at $11.09.

Is now the time to buy Agora? Access our full analysis of the earnings results here, it's free.

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 recently IPOed company, with an impressive beat of analyst estimates and a very optimistic guidance for the next quarter.

GitLab Total Revenue

The stock is down 33.1% since the results and currently trades at $59.75.

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. It was an OK quarter for the company, with a steady revenue growth in line with analyst expectations.

Akamai had the weakest performance against analyst estimates and slowest revenue growth in the group. The stock is up 7.09% since the results and currently trades at $112.59.

Read our full analysis of Akamai's results here.

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 $740.1 million, up 65.2% year on year, beating analyst expectations by 8.19%. It was a very strong quarter for the company, with accelerating customer growth and revenue guidance for the next quarter above analyst estimates.

The company added 10,000 customers to a total of 250,000. The stock is down 43.4% since the results and currently trades at $195.50.

Read our full, actionable report on Twilio here, it's free.

New Relic (NYSE:NEWR)

With the name being an anagram of its founder, Lew Cirne, New Relic (NYSE:NEWR) makes a monitoring software that collects, scores, and analyses performance data about a client's IT stack.

New Relic reported revenues of $195.6 million, up 17.8% year on year, beating analyst expectations by 7.4%. It was a strong quarter for the company, with accelerating growth in large customers.

New Relic pulled off the highest full year guidance raise among the peers. The company added 47 enterprise customers paying more than $100,000 annually to a total of 1,011. The stock is up 8.93% since the results and currently trades at $99.09.

Read our full, actionable report on New Relic here, it's free.

The author has no position in any of the stocks mentioned