As the Q1 earnings season wraps, let's dig into this quarter's best and worst performers in the software development industry, including Datadog (NASDAQ:DDOG (NASDAQ:DDOG)) 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 slower Q1; on average, revenues beat analyst consensus estimates by 1.7%. while next quarter's revenue guidance was in line with consensus. Inflation progressed towards the Fed's 2% goal at the end of 2023, leading to strong stock market performance. The start of 2024 has been a bumpier ride, as the market switches between optimism and pessimism around rate cuts due to mixed inflation data, and while some of the software development stocks have fared somewhat better than others, they collectively declined, with share prices falling 2% on average since the previous earnings results.
Best Q1: 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 $611.3 million, up 26.9% year on year, topping analysts' expectations by 3.3%. It was a strong quarter for the company, with an impressive beat of analysts' ARR (annual recurring revenue) estimates and accelerating growth in large customers.
"Datadog executed solidly in the first quarter, with 27% year-over-year revenue growth and continued product innovation across our platform," said Olivier Pomel, co-founder and CEO of Datadog.
The stock is up 4.3% since the results and currently trades at $132.4.
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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 $171 million, up 24.1% year on year, outperforming analysts' expectations by 3.6%. It was a solid quarter for the company, with optimistic revenue guidance for the next quarter and an improvement in its gross margin.
Bandwidth pulled off the highest full-year guidance raise among its peers. The stock is down 17.8% since the results and currently trades at $16.9.
Weakest Q1: F5 (NASDAQ:FFIV) Initially started as a hardware appliances company in the late 1990s, F5 (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 reported revenues of $681.4 million, down 3.1% year on year, falling short of analysts' expectations by 0.4%. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and a miss of analysts' billings estimates.
F5 had the weakest performance against analyst estimates and slowest revenue growth in the group. The stock is down 5.3% since the results and currently trades at $172.47.
JFrog (NASDAQ:FROG) Named after the founders' affinity for frogs, JFrog (NASDAQ:FROG) provides a software-as-a-service platform that makes developing and releasing software easier and faster, especially for large teams.
JFrog reported revenues of $100.3 million, up 25.7% year on year, surpassing analysts' expectations by 1.7%. It was a weaker quarter for the company, with a miss of analysts' billings estimates and decelerating growth in large customers.
The company added 25 enterprise customers paying more than $100,000 annually to reach a total of 911. The stock is down 11% since the results and currently trades at $36.2.
Akamai (NASDAQ:AKAM) 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 $987 million, up 7.8% year on year, falling short of analysts' expectations by 0.2%. It was a weak quarter for the company: Although its EPS beat Wall Street's estimates, its full-year revenue guidance missed analysts' expectations.
Akamai had the weakest full-year guidance update among its peers. The stock is down 9.4% since the results and currently trades at $92.97.
This content was originally published on Stock Story
