Looking back on software development stocks' Q3 earnings, we examine this quarter's 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. 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 in line with consensus. Tech stocks have been under pressure as inflation makes their long-dated profits less valuable, but software development stocks held their ground better than others, with the share prices up 12.4% 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 $253.8 million, up 47.2% year on year, beating analyst expectations by 1.59%. Despite the stock dropping on the result, it was a decent quarter for the company, with exceptional revenue growth.
“We achieved an important milestone in the third quarter, surpassing $1 billion in annualized revenue for the first time. The opportunity we have in front of us is enormous. Even with this achievement, we’ve penetrated less than 1 percent of our identified market for the products we have available today,” said Matthew Prince, co-founder & CEO of Cloudflare.
The stock is down 14% since the results and currently trades at $43.28.
Is now the time to buy Cloudflare? Access our full analysis of the earnings results 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 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 11.1% since the results and currently trades at $29.59.
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 revenu, and weakest full year guidance update in the group. The company added 110 customers to a total of 2,987. The stock is up 43.1% since the results and currently trades at $4.79.
Read our full analysis of Agora'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 $226.9 million, up 15.9% year on year, beating analyst expectations by 1.97%. It was a weak quarter for the company, with revenue guidance for the next quarter and full year missing analysts' expectations.
The stock is up 11.4% since the results and currently trades at $57.83.
Read our full, actionable report on New Relic here, it's free.
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.
GitLab delivered the fastest revenue growth among the peers. The stock is up 17% since the results and currently trades at $44.89.
Read our full, actionable report on GitLab here, it's free.
The author has no position in any of the stocks mentioned