Software Development Stocks Q3 Teardown: GitLab (NASDAQ:GTLB) Vs The Rest
As Q3 earnings season comes to a close, it’s time to take stock of this quarter's best and worst performers amongst the software development stocks, including GitLab (NASDAQ:GTLB) and its peers.
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. Stocks have been under pressure as inflation (despite slowing) makes their long-dated profits less valuable, but software development stocks held their ground better than others, with the share prices up 30.9% on average since the previous earnings results.
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, topping 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.
“We delivered a strong quarter, which was driven by the continued adoption of our DevSecOps Platform,” said Sid Sijbrandij, GitLab CEO and co-founder.
GitLab scored the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise of the whole group. The stock is up 29.5% since the results and currently trades at $68.5.
We think GitLab is a good business, but is it a buy today? Read our full report here, it's free.
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, outperforming 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.
The stock is up 64.1% since the results and currently trades at $130.66.
Is now the time to buy Datadog? 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.
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.
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 $351.7 million, up 25.9% year on year, surpassing analyst expectations by 2.1%. It was a mixed quarter for the company, with a decent beat of analysts' revenue estimates but underwhelming revenue guidance for the next quarter.
The stock is up 31.3% since the results and currently trades at $58.3.
Read our full, actionable report on Dynatrace here, it's free.
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The author has no position in any of the stocks mentioned
