Software Development Stocks Q3 Earnings: JFrog (NASDAQ:FROG) Best of the Bunch

January 07, 2025 at 04:05 AM EST

FROG Cover Image

As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q3. Today, we are looking at software development stocks, starting with JFrog (NASDAQ: FROG).

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 Q3. As a group, revenues beat analysts’ consensus estimates by 3.3% while next quarter’s revenue guidance was 0.7% above.

Thankfully, share prices of the companies have been resilient as they are up 6.4% on average since the latest earnings results.

Best Q3: 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 $109.1 million, up 23% year on year. This print exceeded analysts’ expectations by 3.3%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ billings estimates and accelerating growth in large customers.

"Our third quarter results reflect strong execution in a tight budgetary environment, with some of the largest enterprise wins in JFrog's history," said Shlomi Ben Haim, Co-founder and CEO of JFrog.

Unsurprisingly, the stock is down 3.1% since reporting and currently trades at $31.87.

We think JFrog is a good business, but is it a buy today? Read our full report 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 $193.9 million, up 27.5% year on year, outperforming analysts’ expectations by 6.5%. The business had a very strong quarter with an impressive beat of analysts’ EBITDA estimates and revenue guidance for next quarter exceeding analysts’ expectations.

Bandwidth scored the biggest analyst estimates beat and highest full-year guidance raise among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 7.3% since reporting. It currently trades at $17.47.

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

Weakest Q3: 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 $1.00 billion, up 4.1% year on year, exceeding analysts’ expectations by 0.5%. Still, it was a slower quarter as it posted revenue guidance for the next quarter below analysts’ expectations.

Akamai delivered the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update in the group. As expected, the stock is down 10.9% since the results and currently trades at $92.99.

Read our full analysis of Akamai’s results here.

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 $196 million, up 31% year on year. This result beat analysts’ expectations by 4.1%. Overall, it was a strong quarter as it also recorded EPS guidance for next quarter exceeding analysts’ expectations and an impressive beat of analysts’ EBITDA estimates.

GitLab scored the fastest revenue growth among its peers. The stock is down 5.4% since reporting and currently trades at $62.50.

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

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 $173.4 million, up 18.7% year on year. This print surpassed analysts’ expectations by 6.1%. It was a strong quarter as it also produced an impressive beat of analysts’ EBITDA estimates and billings in line with analysts’ estimates.

The company added 12 enterprise customers paying more than $100,000 annually to reach a total of 946. The stock is up 3% since reporting and currently trades at $34.65.

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

Market Update

Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.

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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