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Reflecting On Software Development Stocks’ Q2 Earnings: GitLab (NASDAQ:GTLB)


Petr Huřťák /
2022/10/17 3:25 am EDT
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The end of an earnings season can be a great time to assess how companies are handling the current business environment and discover new stocks. Let’s have a look at how GitLab (NASDAQ:GTLB) and the rest of the software development stocks fared in Q2.

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. There has been a stampede out of high valuation technology stocks as raising interest rates encourage investors to value profits over growth again and software development stocks have not been spared, with share prices down 21.9% since the previous earnings results, on average.

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 $101 million, up 73.8% year on year, beating analyst expectations by 6.99%. Despite the stock dropping on the results, it was a very strong quarter for the company, with exceptional revenue growth and a solid beat of analyst estimates.

“We continue to see strong momentum in our business, and our second quarter results indicate that the market is embracing our One DevOps Platform leadership position,” said Sid Sijbrandij, GitLab CEO and Co-Founder.

GitLab Total Revenue

The stock is down 11.9% since the results and currently trades at $41.90.

We think GitLab is a good business, but is it a buy today? Read our full report here, it's free.

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 exceptional revenue growth.

HashiCorp Total Revenue

HashiCorp achieved 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 11.4% since the results and currently trades at $26.80.

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

Slowest 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 a full year guidance missing analysts' expectations and an underwhelming revenue guidance for the next quarter.

Dynatrace had the weakest full year guidance update in the group. The stock is down 14.9% since the results and currently trades at $32.59.

Read our full analysis of Dynatrace's results here.

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 an increase in gross margins but 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 13.6% since the results and currently trades at $53.00.

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

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 $40.9 million, down 3.2% year on year, beating analyst expectations by 1.95%. It was a decent quarter for the company, with accelerating customer growth but declining revenue.

Agora had the worst revenue number among the peers. The company added 171 customers to a total of 2,877. The stock is down 39.5% since the results and currently trades at $2.87.

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

The author has no position in any of the stocks mentioned