The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Datadog (NASDAQ: DDOG) and the rest of the software development stocks fared in Q4.

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 Q4. As a group, revenues beat analysts’ consensus estimates by 2.4% while next quarter’s revenue guidance was in line.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 24% since the latest earnings results.

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 $737.7 million, up 25.1% year on year. This print exceeded analysts’ expectations by 3%. Despite the top-line beat, it was still a mixed quarter for the company with an impressive beat of analysts’ annual recurring revenue estimates but full-year EPS guidance missing analysts’ expectations.

The stock is down 36.9% since reporting and currently trades at $93.51.

Is now the time to buy Datadog? Access our full analysis of the earnings results here, it’s free.

Best Q4: 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 $766.5 million, up 10.7% year on year, outperforming analysts’ expectations by 7.2%. The business had a strong quarter with an impressive beat of analysts’ billings estimates and a solid beat of analysts’ EBITDA estimates.

F5 scored the biggest analyst estimates beat among its peers. The stock is down 2.3% since reporting. It currently trades at $263.64.

Is now the time to buy F5? Access our full analysis of the earnings results here, it’s free.

Weakest Q4: 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 $1.02 billion, up 2.5% year on year, in line with analysts’ expectations. It was a softer quarter as it posted full-year guidance of slowing revenue growth.

Akamai delivered the weakest performance against analyst estimates and weakest full-year guidance update in the group. As expected, the stock is down 23.7% since the results and currently trades at $74.86.

Read our full analysis of Akamai’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 $210 million, up 27% year on year. This print surpassed analysts’ expectations by 3%. However, it was a slower quarter as it recorded full-year guidance of slowing revenue growth and a poor net revenue retention rate.

The stock is down 30.7% since reporting and currently trades at $12.69.

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 $436.2 million, up 19.5% year on year. This result topped analysts’ expectations by 2.3%. Aside from that, it was a satisfactory quarter as it also logged a solid beat of analysts’ EBITDA estimates but a significant miss of analysts’ billings estimates.

Dynatrace pulled off the highest full-year guidance raise among its peers. The stock is down 21.5% since reporting and currently trades at $45.08.

Read our full, actionable report on Dynatrace here, it’s free.

Market Update

Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.

Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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