As we reflect back on the just completed Q2 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 12 software development stocks we track reported a mixed Q2; on average, revenues beat analyst consensus estimates by 2.54%, while on average next quarter revenue guidance was 0.03% above consensus. Tech multiples have reverted to the historical mean after reaching all time levels in early 2021 and while some of the software development stocks have fared somewhat better than others, they have not been spared, with share prices declining 5.94% 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 $1.04 billion, up 10% year on year, beating analyst expectations by 5.12%. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and decelerating customer growth.
"We closed a strong second quarter, delivering record quarterly revenue, non-GAAP income from operations and free cash flow,” said Jeff Lawson, Twilio's Co-Founder and CEO.
The stock is up 1.78% since the results and currently trades at $59.4.Is now the time to buy Twilio? Read our full report on Twilio here.
Best Q2: 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 $139.6 million, up 38.2% year on year, beating analyst expectations by 7.55%. It was a strong quarter for the company, with an impressive beat of analysts' revenue estimates and full-year revenue guidance beating analysts' expectations.
GitLab achieved the strongest analyst estimates beat, fastest revenue growth, and highest full year guidance raise among its peers. The stock is down 8.05% since the results and currently trades at $45.8.
Is now the time to buy GitLab? Access our full analysis of the earnings results here, it's free.
Weakest Q2: Datadog (NASDAQ:DDOG)
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 $509.5 million, up 25.4% year on year, beating analyst expectations by 1.69%. It was a weak quarter for the company, with full-year revenue guidance missing analysts' expectations and underwhelming revenue guidance for the next quarter.
Datadog had the weakest full year guidance update in the group. The company added 80 enterprise customers paying more than $100,000 annually to a total of 2,990. The stock is down 15.2% since the results and currently trades at $90.2.
Founded in 1999 by two engineers from MIT, Akamai (NASDAQ:AKAM) provides software for organizations to efficiently deliver web content to their customers.
Akamai reported revenues of $935.7 million, up 3.59% year on year, in line with analyst expectations. It was a decent quarter for the company, with strong sales guidance for the next quarter.
Akamai had the slowest revenue growth among the peers. The stock is up 13.7% since the results and currently trades at $108.
Started in 1999 by David Morken who was later joined by Henry Kaestner as co-founder in 2001, Bandwidth (NASDAQ:BAND) provides thousands of customers with a software platform that uses its own global network to provide phone numbers, voice, and text connectivity.
Bandwidth reported revenues of $145.9 million, up 6.88% year on year, beating analyst expectations by 3.55%. It was a mixed quarter for the company, with a decent beat of analysts' revenue estimates. On the other hand, its slowing growth in net revenue retention wasn't great and while full year revenue guidance was raised, full year adjusted EBITDA guidance was maintained at the midpoint.
The stock is down 15.3% since the results and currently trades at $11.76.
The author has no position in any of the stocks mentioned