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Spotting Winners: GitLab (NASDAQ:GTLB) And Software Development Stocks In Q3


Petr Huřťák /
2023/01/11 4:07 am EST
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Earnings results often give us a good indication of what direction the company take in the months ahead. With Q3 now behind us, let’s have a look at GitLab (NASDAQ:GTLB) 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 Q3; on average, revenues beat analyst consensus estimates by 2.92%, while on average next quarter revenue guidance was 0.04% under consensus. Technology stocks have been hit hard on fears of higher interest rates as investors search for near-term cash flows, but software development stocks held their ground better than others, with the share prices up 6.96% 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 $112.9 million, up 69.1% year on year, beating analyst expectations by 6.5%. It was a very strong quarter for the company, with exceptional revenue growth and a solid beat of analyst estimates.

“Companies cannot afford to slow down their software innovation,” said Sid Sijbrandij, GitLab CEO and Co-Founder.

GitLab Total Revenue

GitLab scored the fastest revenue growth of the whole group. The stock is up 6.96% since the results and currently trades at $41.02.

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

Best Q3: 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 $125.3 million, up 52.4% year on year, beating analyst expectations by 12.7%. It was a very strong 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 26 enterprise customers paying more than $100,000 annually to a total of 760. The stock is up 1.05% since the results and currently trades at $26.91.

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

Weakest Q3: 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 8.99% year on year, missing analyst expectations by 7.83%. It was a weak quarter for the company, with a full year guidance missing analysts' expectations.

Agora had the weakest performance against analyst estimates, declining revenue, and weakest full year guidance update in the group. The company added 110 customers to a total of 2,987. The stock is up 39.9% since the results and currently trades at $4.68.

Read our full analysis of Agora's results here.

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 $436.5 million, up 61.3% year on year, beating analyst expectations by 5.37%. It was a decent quarter for the company, with exceptional revenue growth but a decline in gross margin.

The company added 180 enterprise customers paying more than $100,000 annually to a total of 2,600. The stock is down 10% since the results and currently trades at $67.00.

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

JFrog (NASDAQ:FROG)

With the name chosen due to the founders' fondness for frogs, JFrog (NASDAQ:FROG) provides software as a service platform that makes developing and releasing software easier and faster, especially for large teams.

JFrog reported revenues of $71.9 million, up 34% year on year, beating analyst expectations by 1.88%. It was a mixed quarter for the company, with strong top line growth but a decline in net revenue retention rate.

The company added 49 enterprise customers paying more than $100,000 annually to a total of 696. The stock is down 7.78% since the results and currently trades at $21.20.

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

The author has no position in any of the stocks mentioned