2447

A Look Back at Software Development Stocks' Q3 Earnings: Cloudflare (NYSE:NET) Vs The Rest Of The Pack


Kayode Omotosho /
2022/01/17 6:15 am EST
Add to Watchlist

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 Cloudflare (NYSE:NET) and the rest of the software development stocks fared in Q3.

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 13 software development stocks we track reported a strong Q3; on average, revenues beat analyst consensus estimates by 5.41%, while on average next quarter revenue guidance was 3.29% above consensus. Tech stocks have been under pressure since the end of last year and while some of the software development stocks have fared somewhat better, they have not been spared, with share price declining 18.2% since earnings, on average.

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 $172.3 million, up 50.9% year on year, beating analyst expectations by 4.04%. It was a very strong quarter for the company, with an exceptional revenue growth and a very optimistic guidance for the next quarter.

Cloudflare Total Revenue

The high-flying stock is down 50.1% since the results and currently trades at $100.29.

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

Best Q3: 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 $66.8 million, up 51.3% year on year, beating analyst expectations by 12.8%. It was an incredible quarter for the company, with an impressive beat of analyst estimates and a very optimistic guidance for the next quarter.

GitLab Total Revenue

The stock is down 28.4% since the results and currently trades at $64.

Slowest Q3: 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 $860.3 million, up 8.51% year on year, in line with analyst expectations. It was a slower quarter for the company, with a more steady revenue growth, compared to its high-growth peers.

Akamai had the weakest performance against analyst estimates and slowest revenue growth in the group. The stock is up 6.12% since the results and currently trades at $111.57.

Read our full analysis of Akamai'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 $195.6 million, up 17.8% year on year, beating analyst expectations by 7.4%. It was a very strong quarter for the company, with accelerating growth in large customers.

New Relic scored the highest full year guidance raise among the peers. The company added 47 enterprise customers paying more than $100,000 annually to a total of 1,011. The stock is up 15.5% since the results and currently trades at $105.09.

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

Twilio (NYSE:TWLO)

Founded in 2008 by Jeff Lawson, a former engineer at Amazon, Twilio (NYSE:TWLO) is a software as a service platform that makes it really easy for software developers to use text messaging, voice calls and other forms of communication in their apps.

Twilio reported revenues of $740.1 million, up 65.2% year on year, beating analyst expectations by 8.19%. It was a very strong quarter for the company, with accelerating customer growth.

The company added 10,000 customers to a total of 250,000. The stock is down 37.5% since the results and currently trades at $215.99.

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

The author has no position in any of the stocks mentioned