Software Development Stocks Q3 Teardown: Dynatrace (NYSE:DT) Vs. The Rest

Quarterly results are a good time to check a company’s progress, especially compared to peers in the same sector. Today we look at Dynatrace (NYSE:DT) 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 very strong third quarter. As a group, revenues exceeded analyst consensus expectations by 2.7%, while revenue expectations for the next quarter were in line.

In light of this news, the companies’ share prices have remained stable as they have risen an average of 1.4% since the last earnings results.

With the platform processing more than 30 trillion pieces of IT performance data every day, Dynatrace (NYSE:DT) offers an AI-powered platform that helps organizations monitor, secure and optimize their applications and IT infrastructure in cloud environments.

Dynatrace reported revenue of $493.8 million, up 18.1% year over year. This print exceeded analyst expectations by 1.3%. Overall, it was a satisfying quarter for the company, with a solid improvement on analyst EBITDA estimates but a significant miss on analyst expectations.

“Our strong second quarter results were fueled by growing demand for end-to-end observability, driven by large-scale tool consolidations,” said Rick McConnell, CEO of Dynatrace.

Total revenue of Dynatrace

Unsurprisingly, the stock is down 10% since reporting and is currently trading at $44.66.

Is Now the Time to Buy Dynatrace? See our full analysis of the revenue results here. This is free for active Edge members.

Named after the amphibian that continually evolves from egg to tadpole to adult, JFrog (NASDAQ:FROG) provides a platform that allows organizations to securely create, store, manage and distribute software packages across any system.

JFrog reported revenue of $136.9 million, up 25.5% year over year, beating analyst expectations by 6.6%. The company had an exceptional quarter with solid earnings in analyst expectations and next quarter earnings estimates exceeding analyst expectations.

JFrog scored the highest analyst estimates among its peers. The company added 45 business customers paying more than $100,000 annually, bringing the total to 1,121. The market seems pleased with the results, as the stock is up 35.5% since reporting. It is currently trading at $64.03.

Is Now the Time to Buy JFrog? See our full analysis of the revenue results here. This is free for active Edge members.

Originally named after the F5 tornado, the most powerful on a meteorological scale, F5 (NASDAQ:FFIV) provides security and delivery solutions that protect applications in cloud, data center and edge environments for large organizations.

F5 reported revenue of $810.1 million, up 8.5% year over year, beating analyst expectations by 2%. Still, it was a slower quarter as full-year earnings expectations significantly missed analyst expectations and revenue expectations for the next quarter fell significantly short of analyst expectations.

As expected, the stock has fallen 11.8% since the results and is currently trading at $256.15.

Read our full analysis of F5’s results here.

With its fully remote workforce pioneering a new approach to software development, GitLab (NASDAQ:GTLB) offers a single-application DevSecOps platform that allows development, operations and security teams to work together to build, secure and deploy software faster.

GitLab reported revenue of $244.4 million, up 24.6% year over year. This result exceeded analyst expectations by 2.2%. Zooming out, it was a mixed quarter, as it also posted an impressive increase in analyst EBITDA estimates, but a significant miss in analyst billing estimates.

The stock is down 12.5% since reporting and is currently trading at $37.96.

Read our full, actionable report on GitLab here, it’s free for active Edge members.

Fastly (NYSE:FSLY) derives its name from the core benefit it offers customers and operates an edge cloud platform that processes, secures and delivers web content as close to end users as possible, enabling faster digital experiences.

Fastly reported revenue of $158.2 million, up 15.3% year over year. This print exceeded analyst expectations by 4.7%. Overall, it was an exceptional quarter, as it also saw next quarter earnings per share expectations exceeding analyst expectations and a solid improvement in analyst EBITDA estimates.

Fastly had the weakest full-year guidance update among its peers. The stock is up 23.7% since reporting and is currently trading at $9.98.

Read our full, actionable report on Fastly here. It’s free for active Edge members.

As a result of the Fed’s rate hikes in 2022 and 2023, inflation has fallen from its frothy post-pandemic levels. Overall price growth for goods and services has been trending toward the Fed’s 2% target lately, which is good news. The higher interest rates that combated inflation also did not slow economic activity enough to catalyze a recession. A soft landing so far. This, combined with recent interest rate cuts (half a percent in September 2024 and a quarter of a percent in November 2024) has led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the US presidential election in early November, sending major indices to record highs in the week after the election. Still, debates remain about the health of the economy and the impact of potential rate cuts and corporate tax cuts, leaving a lot of uncertainty around 2025.

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