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 Q1.
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 decent Q1; on average, revenues beat analyst consensus estimates by 3.49%, while on average next quarter revenue guidance was 1.18% above consensus. The whole tech sector has been facing a sell-off since late last year, but software development stocks held their ground better than others, with share price down 9.15% since earnings, on average.
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 $212.1 million, up 53.6% year on year, beating analyst expectations by 3.16%. It was a very strong quarter for the company, with an exceptional revenue growth and a very optimistic guidance for the next quarter.
“Cloudflare had a terrific first quarter of 2022, beating expectations with revenue growth up 54% year-over-year and adding more than 14,000 new paying customers—a quarterly record,” said Matthew Prince, co-founder & CEO of Cloudflare.
The stock is down 42.9% since the results and currently trades at $44.42.
Best Q1: 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 $87.4 million, up 61.7% year on year, beating analyst expectations by 11.8%. It was a very strong quarter for the company, with an impressive beat of analyst estimates and an exceptional revenue growth.
GitLab achieved the strongest analyst estimates beat among its peers. The stock is up 19% since the results and currently trades at $47.44.
Is now the time to buy GitLab? Access our full analysis of the earnings results here, it's free.
Weakest Q1: 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 $634.2 million, down 1.72% year on year, in line with analyst expectations. It was a weak quarter for the company, with a slow revenue growth and an underwhelming revenue guidance for the next quarter.
The stock is down 21.6% since the results and currently trades at $151.77.
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 $205.7 million, up 19.1% year on year, in line with analyst expectations. It was a mixed quarter for the company, with a significant improvement in gross margin but decelerating growth in large customers.
The company added 35 enterprise customers paying more than $100,000 annually to a total of 1,099. The stock is up 2.34% since the results and currently trades at $48.90.
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 $875.3 million, up 48.3% year on year, beating analyst expectations by 1.33%. It was a strong quarter for the company, with accelerating customer growth.
The company added 12,000 customers to a total of 268,000. The stock is down 25.3% since the results and currently trades at $88.45.
The author has no position in any of the stocks mentioned