Let’s dig into the relative performance of Bandwidth (NASDAQ:BAND) and its peers as we unravel the now-completed Q2 software development earnings season.
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 Q2. As a group, revenues beat analysts’ consensus estimates by 1.6% while next quarter’s revenue guidance was in line.
The Fed cut its policy rate by 50bps (half a percent) in September 2024, the first in roughly four years. This marks the end of its most pointed inflation-busting campaign since the 1980s. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be assessing whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
Thankfully, software development stocks have been resilient with share prices up 9.1% on average since the latest 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 $173.6 million, up 19% year on year. This print was in line with analysts’ expectations, and overall, it was a strong quarter for the company with an impressive beat of analysts’ EBITDA estimates and a significant improvement in its net revenue retention rate.
"We're pleased to report a very strong first half, making significant progress toward our plan for 2024. In the second quarter, we delivered solid revenue growth while accelerating profitability and cash flow," said David Morken, CEO of Bandwidth.
Unsurprisingly, the stock is down 21.8% since reporting and currently trades at $17.80.
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Best Q2: 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 $182.6 million, up 30.8% year on year, outperforming analysts’ expectations by 3.1%. The business had a very strong quarter with an impressive beat of analysts’ billings estimates and optimistic earnings guidance for the next quarter.
GitLab achieved the fastest revenue growth and highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 18.8% since reporting. It currently trades at $53.10.
Weakest Q2: PagerDuty (NYSE:PD)
Started by three former Amazon (NASDAQ:AMZN) 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 $115.9 million, up 7.7% year on year, in line with analysts’ expectations. It was a slower quarter as it posted underwhelming revenue guidance for the next quarter.
PagerDuty delivered the weakest full-year guidance update in the group. The company lost 76 customers and ended up with a total of 15,044. As expected, the stock is down 3.4% since the results and currently trades at $17.66.
HashiCorp (NASDAQ:HCP)
Initially created as a research project at the University of Washington, HashiCorp (NASDAQ:HCP) provides software that helps companies operate their own applications in a multi-cloud environment.HashiCorp reported revenues of $165.1 million, up 15.3% year on year. This number beat analysts’ expectations by 5.1%. Taking a step back, it was a satisfactory quarter as it also recorded an impressive beat of analysts’ EBITDA estimates.
HashiCorp achieved the biggest analyst estimates beat among its peers. The company added 16 enterprise customers paying more than $100,000 annually to reach a total of 934. The stock is flat since reporting and currently trades at $33.84.
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 $103 million, up 22.4% year on year. This result was in line with analysts’ expectations. Aside from that, it was a slower quarter as it recorded underwhelming revenue guidance for the next quarter and decelerating growth in large customers.
JFrog had the weakest performance against analyst estimates among its peers. The company added 17 enterprise customers paying more than $100,000 annually to reach a total of 928. The stock is down 13.3% since reporting and currently trades at $29.51.
This content was originally published on Stock Story
