Let’s take a look at the relative performance of Dynatrace ( NYSE:DT ) and its peers as we unravel the now-completed second-quarter software development earnings season.
As legendary venture capital investor Marc Andreessen says, “Software is eating the world,” and it’s affecting virtually every industry. That’s driving increasing demand for tools that help software developers do their work, whether it’s monitoring critical cloud infrastructure, integrating audio and video functionality, or ensuring smooth content streaming.
The eleven software development stocks we track reported a mixed second quarter. As a group, revenues exceeded analyst consensus expectations by 1.6%, while revenue expectations for the next quarter were in line.
The Fed cut its policy rate by 50 basis points (half a percent) in September 2024, the first in about four years. This marks the end of the most targeted anti-inflation campaign since the 1980s. While the CPI (inflation) numbers have been supportive lately, the employment measures have turned out to be almost worrisome. Markets will assess whether the timing of this rate cut (and more potential ones in 2024 and 2025) is ideal to support the economy or a bit too late for a macro that has already cooled too much.
Fortunately, software development stocks have been resilient, with share prices up an average of 8% since the last earnings results.
Dynatrace (NYSE:DT)
Founded in 2005 in Austria, Dynatrace (NYSE:DT) provides companies with software to monitor the performance of their entire technology stack, from software applications to the infrastructure they run on.
Dynatrace reported revenue of $399.2 million, up 19.9% year over year. This print exceeded analyst expectations by 1.8%. Despite the revenue increase, it was still a mixed quarter for the company, with a decent improvement in analyst expectations but a decline in gross margin.
“We are pleased with our first quarter performance, which once again exceeded expectations on all of our key metrics,” said Rick McConnell, Chief Executive Officer of Dynatrace.
Interestingly, the stock is up 33.9% since reporting and is currently trading at $54.20.
Is Now the Time to Buy Dynatrace? See our full analysis of earnings results here. It’s free.
Best Second Quarter: GitLab (NASDAQ:GTLB)
Founded as an open source project in 2011, GitLab (NASDAQ:GTLB) is a leading platform for software development tools.
GitLab reported revenue of $182.6 million, up 30.8% year over year, and beat analyst expectations by 3.1%. The company had a strong quarter with an impressive gain in analyst expectations and a narrow gain in ARR (annual recurring revenue) estimates.
GitLab scored the fastest revenue growth and highest full-year forecast lift among its peers. The market seems pleased with the results, as the stock is up 12.3% since reporting. It is currently trading at $50.16.
Is Now the Time to Buy GitLab? See our full analysis of earnings results here. It’s free.
Weakest second quarter: PagerDuty (NYSE:PD)
Founded by three former Amazon engineers, PagerDuty (NYSE:PD) is a software-as-a-service platform that helps companies quickly respond to IT incidents and ensure any downtime is minimized.
PagerDuty reported revenue of $115.9 million, up 7.7% year over year, in line with analyst expectations. It was a weaker quarter as revenue expectations for the next quarter were disappointing and customer growth declined.
PagerDuty provided the weakest full-year outlook update in the group. The company lost 76 customers for a total of 15,044. The stock is flat since the results and is currently trading at $18.10.
Read our full analysis of PagerDuty’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 easy for software developers to use text messages, voice calls and other forms of communication in use their apps.
Twilio reported revenue of $1.08 billion, up 4.3% year over year. This print exceeded analyst expectations by 2.4%. Apart from that, it was a slower quarter as there was slowing customer growth and disappointing revenue expectations for the next quarter.
The company added 3,000 customers, reaching a total of 316,000. The stock is up 21.3% since reporting and is currently trading at $68.28.
Read our full, actionable report on Twilio here. It’s free.
F5 (NASDAQ:FFIV)
F5 (NASDAQ:FFIV) initially started as a hardware equipment company in the late 1990s, making software that helps large enterprises ensure their web applications are always available by distributing network traffic and protecting them from cyberattacks.
F5 reported revenue of $695.5 million, down 1% year over year. This print exceeded analyst expectations by 1.4%. Zooming out, it was a slower quarter as analyst expectations were not met.
F5 had the slowest sales growth among its competitors. The stock is up 22.8% since reporting and is currently trading at $218.28.
Read our full, actionable report on F5 here. It’s free.
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