Software Development Stocks Q2 Recap: Benchmarking Cloudflare (NYSE:NET)

Wrapping up Q2 earnings, we look at the numbers and key takeaways for the software development stocks, including Cloudflare (NYSE:NET) and its peers.

Software is eating the world, as Marc Andreessen says, and there is virtually no industry left that has been untouched by it. That in turn drives increasing demand for tools that help software developers do their jobs, whether it is monitoring critical cloud infrastructure, integrating audio and video functionality or ensuring smooth streaming of content.

The 12 software development stocks we track reported a mixed Q2; on average, revenues beat analyst consensus estimates by 2.54%, while on average next quarter revenue guidance was 0.03% above consensus. Technology stocks have been hit hard on fears of higher interest rates as investors search for near-term cash flows and while some of the software development stocks have fared somewhat better than others, they have not been spared, with share prices declining 5.38% since the previous earnings results, on average.

Cloudflare (NYSE:NET)

Founded by two grad students of Harvard Business School, Cloudflare (NYSE:NET) is a software as a service platform that helps improve security, reliability and loading times of internet applications and websites.

Cloudflare reported revenues of $308.5 million, up 31.5% year on year, in line with analyst expectations. It was a decent quarter for the company, with revenue guidance for the next quarter in line with analysts' expectations. Cash flow also turned positive year on year.

“In the second quarter, we grew revenue 32% year-over-year to $308.5 million, had a record quarter for new ACV bookings, and delivered the fourth consecutive quarter of record operating profit. Our team has proven that we can execute in good times and can also deliver operational improvements while we're in more challenging times,” said Matthew Prince, co-founder & CEO of Cloudflare.

The stock is down 2.34% since the results and currently trades at $63.5.

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

Best Q2: 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 $139.6 million, up 38.2% year on year, beating analyst expectations by 7.55%. It was a strong quarter for the company, with an impressive beat of analysts' revenue estimates and full-year revenue guidance beating analysts' expectations.  On the other hand, its net revenue retention fell. However, this declining retention isn't unique to GitLab. We've observed these declines in many software companies this quarter.

GitLab delivered the strongest analyst estimates beat, fastest revenue growth, and highest full year guidance raise among its peers. The stock is down 8.35% since the results and currently trades at $45.65.

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

Weakest Q2: Datadog (NASDAQ:DDOG)

Named after a database the founders had to painstakingly look after at their previous company, Datadog (NASDAQ:DDOG) is a software as a service platform that makes it easier to monitor cloud infrastructure and applications.

Datadog reported revenues of $509.5 million, up 25.4% year on year, beating analyst expectations by 1.69%. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and full-year.

Datadog had the weakest full year guidance update in the group. The company added 80 enterprise customers paying more than $100,000 annually to a total of 2,990. The stock is down 11.7% since the results and currently trades at $93.9.

Read our full analysis of Datadog's results here.

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 $332.9 million, up 24.5% year on year, beating analyst expectations by 1.72%. It was a decent quarter for the company, with strong sales guidance for the next quarter.

The stock is down 15.3% since the results and currently trades at $46.73.

Read our full, actionable report on Dynatrace 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 $143.2 million, up 25.8% year on year, beating analyst expectations by 3.65%. It was a mixed quarter for the company, with revenue and non-GAAP operating profit exceeding expectations. Full-year revenue guidance was raised and came in higher than Wall Street's estimates. On the other hand, its new large contract wins slowed and its net revenue retention decreased, missing estimates.

The company added 21 enterprise customers paying more than $100,000 annually to a total of 851. The stock is down 21.7% since the results and currently trades at $22.83.

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

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The author has no position in any of the stocks mentioned