Software Development Stocks Q3 In Review: Twilio (NYSE:TWLO) Vs Peers
The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how the software development stocks have fared in Q3, starting with Twilio (NYSE:TWLO).
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. Valuation multiples for growth stocks have reverted to their historical means after reaching highs in early 2021, but software development stocks held their ground better than others, with the share prices up 25% on average since the previous earnings results.
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, topping 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 a strong third quarter, delivering another record quarter of non-GAAP income from operations and free cash flow,” said Jeff Lawson, Twilio’s Co-Founder and CEO.
Twilio delivered the weakest full-year guidance update of the whole group. The company added 2,000 customers to reach a total of 306,000. The stock is up 28.7% since the results and currently trades at $71.77.
Read our full report on Twilio here, it's free.
Best Q3: 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 delivered the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. The stock is up 19.3% since the results and currently trades at $63.1.
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 18.4% since the results and currently trades at $175.62.
Read our full analysis of F5 Networks's results here.
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 $108.7 million, up 15.4% year on year, in line with analyst expectations. It was a slower quarter for the company, with decelerating customer growth.
The company lost 97 customers and ended up with a total of 15,049. The stock is up 18.8% since the results and currently trades at $25.9.
Read our full, actionable report on PagerDuty here, it's free.
Cloudflare (NYSE:NET)
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 $335.6 million, up 32.2% year on year, surpassing analyst expectations by 1.5%. It was a weaker quarter for the company, with underwhelming revenue guidance for the next quarter.
The stock is up 36.5% since the results and currently trades at $77.25.
Read our full, actionable report on Cloudflare here, it's free.
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The author has no position in any of the stocks mentioned
