As cloud monitoring stocks’ Q2 earnings season wraps, let's dig into this quarter's best and worst performers, including Dynatrace (NYSE:DT) and its peers.
Software is eating the world, increasing organizations’ reliance on digital-only solutions. As more workloads and applications move to the cloud, the reliability of the underlying cloud infrastructure becomes ever more critical, and ever more complex. To solve the challenge, companies and their engineering teams have turned to a range of cloud monitoring tools that provide them with visibility to troubleshoot the issues in real time.
The 4 cloud monitoring stocks we track reported a mixed Q2; on average, revenues beat analyst consensus estimates by 1.83%, while on average next quarter revenue guidance was 0.01% under consensus. Increasing interest rates hurt growth companies as investors search for near-term cash flows and while some of the cloud monitoring stocks have fared somewhat better than others, they have not been spared, with share prices declining 6.25% since the previous earnings results, on average.
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 $332.9 million, up 24.5% year on year, beating analyst expectations by 1.72%. It was a decent quarter for the company, with strong sales guidance for the next quarter.
“Dynatrace's first quarter results exceeded guidance across all our key metrics, demonstrating the powerful combination of growth and profitability,” said Rick McConnell, Chief Executive Officer.
Dynatrace achieved the highest full year guidance raise of the whole group. The stock is down 12.1% since the results and currently trades at $48.49.Is now the time to buy Dynatrace? Read our full report on Dynatrace here.
Best Q2: PagerDuty (NYSE:PD)
Started by three former Amazon engineers, PagerDuty (NYSE:PD) is a software as a service platform that helps companies respond to IT incidents fast and make sure that any downtime is minimized.
PagerDuty reported revenues of $107.6 million, up 19.2% year on year, beating analyst expectations by 2.59%. It was a decent quarter for the company, with accelerating customer growth and a beat of analysts' revenue estimates. With regards to guidance, next quarter's revenue guidance was in line, while non-GAAP EPS guidance was slightly below. Full year guidance was largely maintained.
PagerDuty scored the strongest analyst estimates beat among its peers. The company added 57 customers to a total of 15,146. The stock is down 13.7% since the results and currently trades at $22.2.
Is now the time to buy PagerDuty? Access our full analysis of the earnings results here, it's free.
Weakest Q2: 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 $509.5 million, up 25.4% year on year, beating analyst expectations by 1.69%. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and full-year.
Datadog scored the fastest revenue growth but had the weakest full year guidance update in the group. The company added 80 enterprise customers paying more than $100,000 annually to a total of 2,990. The stock is down 14.7% since the results and currently trades at $90.75.
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 $242.6 million, up 12.1% year on year, beating analyst expectations by 1.33%. It was a decent quarter for the company, with revenue and EPS topping analysts' expectations.
New Relic announced that it will be acquired by Francisco Partners and TPG for $87.00 per share in cash. The all-cash transaction values New Relic at an equity valuation of approximately $6.5 billion. The purchase price is a 26% premium to New Relic’s 30-day volume-weighted average closing price ending on July 28, 2023, and approximately a 30% premium to New Relic’s last-twelve-months volume-weighted average closing price ending on July 28, 2023. The transaction is expected to close in late 2023 or early 2024.
New Relic had the weakest performance against analyst estimates and slowest revenue growth among the peers. The stock is up 15.6% since the results and currently trades at $85.56.
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The author has no position in any of the stocks mentioned