Earnings results often give us a good indication what direction will the company take in the months ahead. With Q1 now behind us, let’s have a look at Twilio (NYSE:TWLO) 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 12 software development stocks we track reported a weaker Q1; on average, revenues beat analyst consensus estimates by 2.07%, while on average next quarter revenue guidance was 1.78% under consensus. Investors abandoned cash burning companies since high interest rates will make it harder to raise capital, but software development stocks held their ground better than others, with the share prices up 14.9% since the previous earnings results, on average.
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 $1.01 billion, up 15% year on year, in line with analyst expectations. It was a weaker quarter for the company, with underwhelming revenue guidance for the next quarter and a decline in net revenue retention rate.
“We’ve structured our business with the aim of enabling Twilio to operate profitably in any financial climate and our first quarter non-GAAP income from operations is a strong signal of our ability to do so,” said Jeff Lawson, Twilio’s Co-founder and CEO.
The stock is up 21.3% since the results and currently trades at $67.93.
Best Q1: 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 $314.5 million, up 24.5% year on year, beating analyst expectations by 3.23%. It was a strong quarter for the company, with revenue guidance for the next quarter and full year beating analysts' expectations.
Dynatrace delivered the highest full year guidance raise among its peers. The stock is up 9.97% since the results and currently trades at $51.5.
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Weakest Q1: PagerDuty (NYSE:PD)
Started by three former Amazon engineers, PagerDuty (NYSE:PD) is a software as a service platform that helps companies respond to IT incidents fast and make sure that any downtime is minimized.
PagerDuty reported revenues of $103.2 million, up 20.9% year on year, in line with analyst expectations. It was a weak quarter for the company, with revenue guidance for the next quarter and full year missing analysts' expectations.
PagerDuty had the weakest full year guidance update in the group. The company lost -155 customers and ended up with a total of 15,089. The stock is down 18% since the results and currently trades at $22.75.
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 $703.2 million, up 10.9% year on year, in line with analyst expectations. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter.
The stock is up 10.5% since the results and currently trades at $151.75.
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 $481.7 million, up 32.7% year on year, beating analyst expectations by 2.72%. It was a mixed quarter for the company, with a decent beat of analyst estimates but decelerating growth in large customers.
The company added 130 enterprise customers paying more than $100,000 annually to a total of 2,910. The stock is up 45.2% since the results and currently trades at $95.65.
The author has no position in any of the stocks mentioned