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Software Development Stocks Q3 Results: Benchmarking Bandwidth (NASDAQ:BAND)

By: StockStory

January 16, 2025 at 04:06 AM EST

BAND Cover Image

As the Q3 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the software development industry, including Bandwidth (NASDAQ: BAND) 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 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 5.4% 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 $193.9 million, up 27.5% year on year. This print exceeded analysts’ expectations by 6.5%. Overall, it was a very strong quarter for the company with a solid beat of analysts’ EBITDA estimates and revenue guidance for next quarter exceeding analysts’ expectations.

"We're pleased to report solid momentum carrying us into the end of the year, with record revenue and profitability performance, strong conversion to free cash flow and continued operating discipline," said David Morken, CEO of Bandwidth.

Bandwidth achieved the biggest analyst estimates beat and highest full-year guidance raise of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 14.8% since reporting and currently trades at $16.06.

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

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, outperforming analysts’ expectations by 3.3%. The business had a very strong quarter with a solid beat of analysts’ billings estimates and accelerating growth in large customers.

The market seems content with the results as the stock is up 2.8% since reporting. It currently trades at $33.79.

Is now the time to buy JFrog? 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 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 12.7% since the results and currently trades at $91.10.

Read our full analysis of Akamai’s results here.

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 $1.13 billion, up 9.7% year on year. This result beat analysts’ expectations by 3.7%. Overall, it was a very strong quarter as it also recorded EPS guidance for next quarter exceeding analysts’ expectations.

The company added 4,000 customers to reach a total of 320,000. The stock is up 60.1% since reporting and currently trades at $113.

Read our full, actionable report on Twilio 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 $418.1 million, up 18.9% year on year. This number surpassed analysts’ expectations by 2.9%. It was a very strong quarter as it also put up an impressive beat of analysts’ EBITDA estimates and full-year EPS guidance exceeding analysts’ expectations.

The stock is down 8.8% since reporting and currently trades at $51.52.

Read our full, actionable report on Dynatrace 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 Growth Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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