Wrapping up Q1 earnings, we look at the numbers and key takeaways for the software development stocks, including Twilio (NYSE: TWLO) 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 strong Q1. As a group, revenues beat analysts’ consensus estimates by 2.3% while next quarter’s revenue guidance was in line.
Luckily, software development stocks have performed well with share prices up 10.8% on average since the latest earnings results.
Twilio (NYSE: TWLO)
Founded in 2008 by Jeff Lawson, a former engineer at Amazon, Twilio (NYSE: TWLO) is a software as a service platform that makes it really easy for software developers to use text messaging, voice calls and other forms of communication in their apps.
Twilio reported revenues of $1.17 billion, up 12% year on year. This print exceeded analysts’ expectations by 2.6%. Overall, it was a strong quarter for the company with accelerating customer growth and an impressive beat of analysts’ EBITDA estimates.
“Twilio saw another quarter of revenue growth acceleration and double-digit growth, illustrating that our commitment to operating with more discipline, rigor, and focus is paying off," said Khozema Shipchandler, CEO of Twilio.
The stock is up 20% since reporting and currently trades at $117.50.
Is now the time to buy Twilio? Access our full analysis of the earnings results here, it’s free.
Best Q1: Fastly (NYSE: FSLY)
Founded in 2011, Fastly (NYSE: FSLY) provides content delivery and edge cloud computing services, enabling enterprises and developers to deliver fast, secure, and scalable digital content and experiences.
Fastly reported revenues of $144.5 million, up 8.2% year on year, outperforming analysts’ expectations by 4.8%. The business had an exceptional quarter with a solid beat of analysts’ EBITDA estimates.
Fastly pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 13.1% since reporting. It currently trades at $6.80.
Is now the time to buy Fastly? Access our full analysis of the earnings results here, it’s free.
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 $731.1 million, up 7.3% year on year, exceeding analysts’ expectations by 1.7%. Still, it was a mixed quarter as it posted EPS guidance for next quarter missing analysts’ expectations.
Interestingly, the stock is up 8.1% since the results and currently trades at $286.48.
Read our full analysis of F5’s results here.
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 $445.2 million, up 16.9% year on year. This number surpassed analysts’ expectations by 2.4%. Overall, it was a very strong quarter as it also logged EPS guidance for next quarter exceeding analysts’ expectations and an impressive beat of analysts’ EBITDA estimates.
Dynatrace pulled off the highest full-year guidance raise among its peers. The stock is up 9.3% since reporting and currently trades at $55.20.
Read our full, actionable report on Dynatrace here, it’s free.
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 $174.2 million, up 1.9% year on year. This print topped analysts’ expectations by 3.1%. Taking a step back, it was a satisfactory quarter as it also recorded an impressive beat of analysts’ EBITDA estimates.
Bandwidth had the slowest revenue growth among its peers. The stock is up 15.5% since reporting and currently trades at $14.19.
Read our full, actionable report on Bandwidth 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.
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