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Software Development Stocks Q1 Results: Benchmarking F5 (NASDAQ:FFIV)


Max Juang /
2024/07/03 5:15 am EDT

As the Q1 earnings season wraps, let's dig into this quarter's best and worst performers in the software development industry, including F5 (NASDAQ:FFIV) and its peers.

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 2.7% on average since the previous earnings results.

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, falling short of analysts' expectations by 0.4%. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and a miss of analysts' billings estimates.

“We delivered a solid second quarter, with revenue near the midpoint of our guidance range and earnings per share at the high end of our guidance in an environment where customers remain cautious and are forecasting largely flat IT budgets for calendar 2024,” said François Locoh-Donou, F5’s President and CEO.

F5 Total Revenue

F5 delivered the weakest performance against analyst estimates and slowest revenue growth of the whole group. The stock is down 5.4% since the results and currently trades at $172.31.

Read our full report on F5 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.

Datadog Total Revenue

The stock is up 4.2% since the results and currently trades at $132.3.

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

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, falling short of analysts' expectations by 0.2%. It was a weak quarter for the company. Although its EPS beat Wall Street's estimates, its full-year revenue guidance missed analysts' expectations.

Akamai had the weakest full-year guidance update in the group. The stock is down 11.6% since the results and currently trades at $90.66.

Read our full analysis of Akamai's results here.

Cloudflare (NYSE:NET)

Founded by two grad students of Harvard Business School, Cloudflare (NYSE:NET) is a software as a service platform that helps improve security, reliability and loading times of internet applications and websites.

Cloudflare reported revenues of $378.6 million, up 30.5% year on year, surpassing analysts' expectations by 1.4%. It was a weaker quarter for the company, with a miss of analysts' billings estimates.

The stock is down 4.3% since the results and currently trades at $85.17.

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

Bandwidth (NASDAQ:BAND)

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 $171 million, up 24.1% year on year, surpassing analysts' expectations by 3.6%. It was a solid quarter for the company, with optimistic revenue guidance for the next quarter and an improvement in its gross margin.

Bandwidth achieved the highest full-year guidance raise among its peers. The stock is down 19.6% since the results and currently trades at $16.53.

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

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