Wrapping up Q2 earnings, we look at the numbers and key takeaways for the software development stocks, including Bandwidth (NASDAQ:BAND) 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 mixed Q2; on average, revenues beat analyst consensus estimates by 3.49%, while on average next quarter revenue guidance was 0.45% above consensus. Investors abandoned cash burning companies since high interest rates will make it harder to raise capital and software development stocks have not been spared, with share prices down 15.5% since the previous earnings results, on average.
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 $136.4 million, up 13.1% year on year, beating analyst expectations by 2.18%. It was a weak quarter for the company, with decelerating customer growth and a decline in gross margin.
"I am proud of the operating discipline that enabled us to deliver results that exceeded expectations on both the top and bottom line. Our second quarter results and customer wins demonstrate our execution and focus on serving enterprise customers amidst an uncertain macroeconomic environment," said David Morken, Bandwidth's Chief Executive Officer.
The stock is down 41% since the results and currently trades at $11.59.
Best Q2: 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 $113.8 million, up 51.5% year on year, beating analyst expectations by 11.2%. It was a stunning quarter for the company, with an impressive beat of analyst estimates and an exceptional revenue growth.
HashiCorp pulled off the strongest analyst estimates beat and highest full year guidance raise among its peers. The company added 30 enterprise customers paying more than $100,000 annually to a total of 734. The stock is down 1.81% since the results and currently trades at $29.7.
Is now the time to buy HashiCorp? Access our full analysis of the earnings results here, it's free.
Weakest Q2: 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 $267.2 million, up 27.4% year on year, beating analyst expectations by 2.07%. It was a weak quarter for the company, with revenue guidance for both the next quarter and the full year missing analysts' expectations.
Dynatrace had the weakest full year guidance update in the group. The stock is down 9.44% since the results and currently trades at $34.69.
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 $74.1 million, up 25.9% year on year, beating analyst expectations by 3.57%. It was a strong quarter for the company, with a decent beat of analyst estimates and guidance for the next quarter above analysts' expectations.
The stock is down 17.6% since the results and currently trades at $6.96.
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 $216.4 million, up 19.9% year on year, beating analyst expectations by 1.55%. It was a mixed quarter for the company, with a meaningful improvement in gross margin but an underwhelming revenue guidance for the next quarter.
The company added 38 enterprise customers paying more than $100,000 annually to a total of 1,137. The stock is down 13.4% since the results and currently trades at $53.12.
The author has no position in any of the stocks mentioned