Quarterly results are a good time to check a company’s progress, especially compared to peers in the same sector. Today we look at HashiCorp (NASDAQ:HCP) and the best and worst performers in the software development industry.
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 big picture is that the Federal Reserve has a dual mandate: inflation and employment. The former was at a high temperature in 2021 and 2022, but has recently cooled towards the central bank’s 2% target. This prompted the Fed to cut its policy rate by 50 basis points (half a percent) in September 2024. Given recent employment data suggesting the US economy could be faltering, markets will assess whether these rate cuts and future cuts (the Fed indicated more to come in 2024 and 2025) are the right moves at the right time, or whether they are too little or too late for a macro that has already cooled down.
Fortunately, software development stocks have been resilient, with share prices up an average of 9.1% since the last earnings results.
HashiCorp (NASDAQ:HCP)
HashiCorp (NASDAQ:HCP), originally founded as a research project at the University of Washington, provides software that allows companies to manage their own applications in a multi-cloud environment.
HashiCorp reported revenue of $165.1 million, up 15.3% year over year. This print exceeded analyst expectations by 5.1%. Overall, it was a satisfying quarter for the company, with an impressive improvement in analyst EBITDA estimates.
“The HashiCorp team delivered another solid performance in the second quarter of FY25, with revenue growth of 15% year-over-year and 10% growth in $100,000 customers year-over-year,” said Dave McJannet, CEO of HashiCorp.
HashiCorp achieved the highest analyst profit forecast of the entire group. The company added 16 business customers paying more than $100,000 annually, bringing the total to 934. However, the results were likely already priced in and stock prices have remained stable since reporting. It is currently trading at $33.84.
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Best Q2: Bandwidth (NASDAQ:BAND)
Founded 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 revenue of $173.6 million, up 19% year over year, in line with analyst expectations. The company had a strong quarter, impressively beating analyst EBITDA estimates and significantly improving its net revenue retention rate.
Although it has had a good quarter compared to its peers, the market seems unhappy with the results as the stock is down 21.8% since reporting. It is currently trading at $17.80.
Weakest second quarter: PagerDuty (NYSE:PD)
PagerDuty (NYSE:PD), founded by three former Amazon (NASDAQ:) engineers, is a software-as-a-service platform that helps companies quickly respond to IT incidents and ensure any downtime is minimized is limited.
PagerDuty reported revenue of $115.9 million, up 7.7% year over year, in line with analyst expectations. It was a slower quarter as revenue expectations for the next quarter were disappointing.
PagerDuty provided the weakest full-year outlook update in the group. The company lost 76 customers for a total of 15,044. As expected, the stock is down 3.4% since the results and is currently trading at $17.66.
Cloudflare (NYSE:NYSE:)
Founded by two Harvard Business School students, Cloudflare (NYSE:NET) is a software-as-a-service platform that helps improve the security, reliability, and load times of Internet applications and websites.
Cloudflare reported revenue of $401 million, up 30% year over year. This result exceeded analyst expectations by 1.6%. Let’s take a step back: It was a mixed quarter, as it also delivered an impressive increase in analyst EBITDA estimates, but a miss in analyst billing estimates.
The stock is up 17.5% since reporting and is currently trading at $87.42.
Akamai (NASDAQ:)
Founded in 1999 by two MIT engineers, Akamai (NASDAQ:AKAM) provides software that helps organizations efficiently deliver Web content to their customers.
Akamai reported revenue of $979.6 million, up 4.7% year over year. This number met analysts’ expectations. Apart from that, it was a mixed quarter, as performance in some other parts of the business was disappointing.
The stock is up 12.4% since reporting and is currently trading at $102.89.
This content was originally published on Stock Story
