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Spotting Winners in Q2 Results: Cloudflare (NYSE:NET) Vs The Rest Of The Software Development Stocks


Jabin Bastian /
2021/09/30 8:41 am EDT
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Looking back on software development stocks' Q2 earnings, we examine this quarters’ best and worst performers, including Cloudflare (NYSE:NET) 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. The reliability and security of software becomes ever more critical, and that in turn drives demand for tools that help software developers do their jobs, increase speed and quality of software deployment and monitor the health of the underlying cloud infrastructure.

The 11 software development stocks we track reported a decent Q2; on average, revenues beat analyst consensus estimates by 6.31%, while on average next quarter revenue guidance was 5.52% above consensus. The market rewarded the results with the average return the day after earnings coming in at 1.73%.

Cloudflare (NYSE:NET)

Founded in San Francisco in 2009, Cloudflare is a software as a service platform that helps improve security, reliability and loading times of internet applications and websites.

Cloudflare reported revenues of $152.4 million, up 52.8% year on year, beating analyst expectations by 4.33%. It was very strong quarter for the company, with an exceptional revenue growth and a very optimistic guidance for the next quarter.

“We had our strongest quarter ever as a public company, and our revenue growth continued to accelerate, growing 53% year-over-year. We also added a record number of large customers, signing the equivalent of more than two six-figure customers every single business day in Q2.” said Matthew Prince, co-founder & CEO of Cloudflare.

Cloudflare Total Revenue

The stock is down 1.97% since the results and currently trades at $113.40.

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

Best 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 $233.5 million, up 66.8% year on year, beating analyst expectations by 9.93%. It was very strong quarter for the company, with an impressive revenue growth and an encouraging guidance for the next quarter.

Datadog Total Revenue

Datadog scored the fastest growth in large customers among its peers. The company added 173 enterprise customers paying more than $100,000 annually to a total of 1,610. The stock is up 14.8% since the results and currently trades at $139.80.

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

Weakest Q2: Agora (NASDAQ:API)

Founded in 2014 by former engineers at WebEx and based in China, Agora 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 $42.3 million, up 24.8% year on year, beating analyst expectations by 2.56%. It was weak quarter for the company, with a decline in net revenue retention rate and a full year guidance missing analysts' expectations.

The stock is down 1.31% since the results and currently trades at $27.99.

Read our full analysis of Agora's results here.

Dynatrace (NYSE:DT)

Founded in Austria in 2005, Dynatrace 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 $209.7 million, up 34.8% year on year, beating analyst expectations by 3.08%. It was strong quarter for the company, with a full year guidance beating analysts' expectations.

The stock is up 2.01% since the results and currently trades at $70.15.

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

Twilio (NYSE:TWLO)

Founded in 2008 by Jeff Lawson, a former engineer at Amazon, Twilio 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 $668.9 million, up 66.8% year on year, beating analyst expectations by 11.6%. It was strong quarter for the company, with an impressive beat of analyst estimates.

Twilio scored the strongest analyst estimates beat and fastest revenue growth (just inches ahead of Datadog) among the peers. The stock is down 4.85% since the results and currently trades at $317.19.

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

The author has no position in any of the stocks mentioned