Let’s dig into the relative performance of PagerDuty (NYSE: PD) 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 strong Q2. As a group, revenues beat analysts’ consensus estimates by 2.6% while next quarter’s revenue guidance was in line.
Thankfully, share prices of the companies have been resilient as they are up 5.4% on average since the latest earnings results.
PagerDuty (NYSE: PD)
Born from the frustration of developers being woken up by unprioritized alerts, PagerDuty (NYSE: PD) is a digital operations management platform that helps organizations detect and respond to IT incidents, outages, and other critical issues in real-time.
PagerDuty reported revenues of $123.4 million, up 6.4% year on year. This print was in line with analysts’ expectations, but overall, it was a slower quarter for the company with EPS guidance for next quarter missing analysts’ expectations and a significant miss of analysts’ billings estimates.
PagerDuty delivered the weakest performance against analyst estimates of the whole group. The company added 75 customers to reach a total of 15,322. Interestingly, the stock is up 4.1% since reporting and currently trades at $16.25.
Read our full report on PagerDuty here, it’s free.
Best Q2: Cloudflare (NYSE: NET)
With a massive network spanning more than 310 cities in over 120 countries, Cloudflare (NYSE: NET) provides a global network that delivers security, performance and reliability services to protect websites, applications, and corporate networks.
Cloudflare reported revenues of $512.3 million, up 27.8% year on year, outperforming analysts’ expectations by 2.3%. The business had a very strong quarter with an impressive beat of analysts’ billings estimates and EPS guidance for next quarter exceeding analysts’ expectations.
The market seems happy with the results as the stock is up 5.5% since reporting. It currently trades at $218.95.
Is now the time to buy Cloudflare? Access our full analysis of the earnings results here, it’s free.
Bandwidth (NASDAQ: BAND)
Powering communications for tech giants like Microsoft, Google, and Zoom, Bandwidth (NASDAQ: BAND) provides cloud-based communications software and APIs that enable businesses to embed voice, messaging, and emergency services into their applications and platforms.
Bandwidth reported revenues of $180 million, up 3.7% year on year, exceeding analysts’ expectations by 0.6%. Still, it was a mixed quarter as it posted EBITDA guidance for next quarter missing analysts’ expectations.
Bandwidth delivered the slowest revenue growth in the group. Interestingly, the stock is up 7.3% since the results and currently trades at $17.42.
Read our full analysis of Bandwidth’s results here.
GitLab (NASDAQ: GTLB)
With its all-remote workforce pioneering a new approach to software development, GitLab (NASDAQ: GTLB) provides a single-application DevSecOps platform that helps development, operations, and security teams collaborate to build, secure, and deploy software faster.
GitLab reported revenues of $236 million, up 29.2% year on year. This result surpassed analysts’ expectations by 4%. Taking a step back, it was a satisfactory quarter as it also logged an impressive beat of analysts’ EBITDA estimates but a slight miss of analysts’ annual recurring revenue estimates.
GitLab scored the fastest revenue growth but had the weakest full-year guidance update among its peers. The stock is flat since reporting and currently trades at $47.10.
Read our full, actionable report on GitLab here, it’s free.
Fastly (NYSE: FSLY)
Taking its name from the core advantage it delivers to customers, Fastly (NYSE: FSLY) operates an edge cloud platform that processes, secures, and delivers web content as close to end users as possible, enabling faster digital experiences.
Fastly reported revenues of $148.7 million, up 12.3% year on year. This print topped analysts’ expectations by 2.7%. It was a very strong quarter as it also recorded EPS guidance for next quarter exceeding analysts’ expectations and a solid beat of analysts’ EBITDA estimates.
The stock is up 27.3% since reporting and currently trades at $8.29.
Read our full, actionable report on Fastly here, it’s free.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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