As we reflect back on the just completed Q3 software development sector earnings season, we dig into the relative performance of 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 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 0.04% under consensus. Technology stocks have been hit hard on fears of higher interest rates as investors search for near-term cash flows, but software development stocks held their ground better than others, with the share prices up 9.06% 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 $983 million, up 32.8% year on year, beating analyst expectations by 1.04%. It was a slower quarter for the company, with underwhelming revenue guidance for the next quarter and decelerating customer growth.
“We delivered solid third quarter results, with revenue of $983 million and 33% year-over-year growth, as Twilio's Customer Engagement Platform continues to drive success for our customers,” said Jeff Lawson, Twilio’s co-founder and CEO.
The stock is down 20.4% since the results and currently trades at $52.00.
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 an exceptional quarter for the company, with an impressive beat of analyst estimates and strong revenue growth.
HashiCorp pulled off 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 down 2.74% since the results and currently trades at $25.90.
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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 and declining revenue growth.
Agora had the weakest performance against analyst estimates and the weakest full year guidance update in the group. The company added 110 customers to a total of 2,987. The stock is up 35.4% since the results and currently trades at $4.53.
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 $94.2 million, up 31.2% year on year, beating analyst expectations by 1.85%. It was a mixed quarter for the company, with strong top line growth but decelerating customer growth.
The company added 91 customers to a total of 15,265. The stock is up 11.4% since the results and currently trades at $25.15.
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 results, it was a decent quarter for the company, with exceptional revenue growth.
The stock is down 13.7% since the results and currently trades at $43.40.
The author has no position in any of the stocks mentioned