Software Development Stocks Q3 Earnings: Datadog (NASDAQ:DDOG) Best of the Bunch
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 take a look at how Datadog (NASDAQ:DDOG) and the rest of the software development stocks fared in Q3.
As legendary VC investor Marc Andreessen says, "Software is eating the world", and it touches virtually every industry. That drives increasing demand for tools helping software developers do their jobs, whether it be monitoring critical cloud infrastructure, integrating audio and video functionality, or ensuring smooth content streaming.
The 11 software development stocks we track reported a mixed Q3; on average, revenues beat analyst consensus estimates by 2.5% while next quarter's revenue guidance was 0.6% above consensus. Investors abandoned cash-burning companies to buy stocks with higher margins of safety, but software development stocks held their ground better than others, with the share prices up 28.9% on average since the previous earnings results.
Best Q3: 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 $547.5 million, up 25.4% year on year, topping analyst expectations by 4.5%. It was a very strong quarter for the company, with accelerating growth in large customers and optimistic revenue guidance for the next quarter.
"We were pleased with our execution in the third quarter, with 25% year-over-year revenue growth, robust new logo bookings, and a continued focus on solving our customers' DevSecOps pain points," said Olivier Pomel, co-founder and CEO of Datadog.
The stock is up 64.1% since the results and currently trades at $130.66.
We think Datadog is a good business, but is it a buy today? Read our full report 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 $149.7 million, up 32.5% year on year, outperforming analyst expectations by 6.1%. It was a very strong quarter for the company, with optimistic revenue guidance for the next quarter and a solid beat of analysts' revenue estimates.
GitLab scored the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. The stock is up 29.5% since the results and currently trades at $68.5.
Is now the time to buy GitLab? Access our full analysis of the earnings results here, it's free.
Slowest Q3: F5 Networks (NASDAQ:FFIV)
Initially started as a hardware appliances company in the late 1990s, F5 Networks (NASDAQ:FFIV) makes software that helps large enterprises ensure their web applications are always available by distributing network traffic and protecting them from cyberattacks.
F5 Networks reported revenues of $707 million, flat year on year, in line with analyst expectations. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter.
F5 Networks had the weakest performance against analyst estimates and slowest revenue growth in the group. The stock is up 22.1% since the results and currently trades at $181.
Read our full analysis of F5 Networks's results here.
Twilio (NYSE:TWLO)
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 $1.03 billion, up 5.2% year on year, surpassing analyst expectations by 4.5%. It was a weaker quarter for the company, with guidance for the next quarter missing analysts' expectations and decelerating customer growth.
Twilio had the weakest full-year guidance update among its peers. The company added 2,000 customers to reach a total of 306,000. The stock is up 31.9% since the results and currently trades at $73.52.
Read our full, actionable report on Twilio here, it's free.
Bandwidth (NASDAQ:BAND)
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 $152 million, up 2.5% year on year, surpassing analyst expectations by 2%. It was a weaker quarter for the company, with underwhelming revenue guidance for the next quarter and a decline in its gross margin.
The stock is up 27.5% since the results and currently trades at $13.77.
Read our full, actionable report on Bandwidth here, it's free.
Join Paid Stock Investor Research
Help us make StockStory more helpful to investors like yourself. Join our paid user research session and receive a $50 Amazon gift card for your opinions. Sign up here.
The author has no position in any of the stocks mentioned
