Q2 Earnings Outperformers: Cloudflare (NYSE:NET) And The Rest Of The Software Development Stocks

Radek Strnad /
2022/09/23 3:47 am EDT

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 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. Tech multiples have reverted to the historical mean after reaching all time levels in early 2021 and software development stocks have not been spared, with share price down 13% since the previous earnings results, 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 $234.5 million, up 53.8% year on year, beating analyst expectations by 3.08%. It was a solid quarter for the company, with an exceptional revenue growth and a decent beat of analyst estimates.

“We delivered another strong quarter, with revenue growth up 54% year-over-year, driven by strength in our large customers, and a record number of large customer additions. Large customers now represent 60% of our revenue, and they are leaning forward to hear how Cloudflare can save them money and reduce IT complexity, all while increasing their security, performance, and reliability," said Matthew Prince, co-founder & CEO of Cloudflare.

Cloudflare Total Revenue

The stock is down 2.77% since the results and currently trades at $56.81.

We think Cloudflare 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 an 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 5.88% since the results and currently trades at $28.47.

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 guidance for both the next quarter and full year missing analysts' expectations.

Dynatrace had the weakest full year guidance update in the group. The stock is down 9.94% since the results and currently trades at $34.50.

Read our full analysis of Dynatrace's results here.

F5 Networks (NASDAQ:FFIV)

While the company initially started in the late 90s by selling hardware appliances, these days F5 (NASDAQ:FFIV) is making software that helps large enterprises ensure their web applications are always available, by distributing network traffic and protecting them from cyber attacks.

F5 Networks reported revenues of $674.4 million, up 3.52% year on year, in line with analyst expectations. Despite the stock rising on the results, it was a weaker quarter for the company, with a slow revenue growth.

The stock is down 5.55% since the results and currently trades at $145.66.

Read our full, actionable report on F5 Networks here, it's free.


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 an ok quarter for the company, with accelerating customer growth but a slow revenue growth.

Agora had the slowest revenue growth among the peers. The company added 171 customers to a total of 2,877. The stock is down 15% since the results and currently trades at $4.03.

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

The author has no position in any of the stocks mentioned