Winners And Losers Of Q3: Bandwidth (NASDAQ:BAND) Vs The Rest Of The Software Development Stocks
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 Bandwidth (NASDAQ:BAND).
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 22.1% on average since the previous earnings results.
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, topping 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.
"We are pleased to announce that we have exceeded both our revenue and profitability guidance for the third quarter and made strong progress towards our goal of growing profitability by 30% for the full year. We look forward to finishing 2023 with strong momentum," said David Morken, Bandwidth's Chief Executive Officer.
The stock is up 37.5% since the results and currently trades at $14.86.
Read our full report on Bandwidth 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 an impressive 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 12.4% since the results and currently trades at $59.4.
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 16.6% since the results and currently trades at $172.87.
Read our full analysis of F5 Networks's results here.
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 38.7% since the results and currently trades at $78.49.
Read our full, actionable report on Cloudflare 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 19.3% since the results and currently trades at $52.95.
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
