As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the software development industry, including GitLab (NASDAQ: GTLB) 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 Q2. As a group, revenues beat analysts’ consensus estimates by 2.6% while next quarter’s revenue guidance was in line.
Thankfully, share prices of the companies have been resilient as they are up 8.8% on average since the latest earnings results.
GitLab (NASDAQ: GTLB)
With its all-remote workforce pioneering a new approach to software development, GitLab (NASDAQ: GTLB) provides a single-application DevSecOps platform that helps development, operations, and security teams collaborate to build, secure, and deploy software faster.
GitLab reported revenues of $236 million, up 29.2% year on year. This print exceeded analysts’ expectations by 4%. Despite the top-line beat, it was still a mixed quarter for the company with a solid beat of analysts’ EBITDA estimates but revenue guidance for next quarter slightly missing analysts’ expectations.
“This quarter’s results demonstrate the strength of GitLab’s AI-native DevSecOps platform as we continue to drive customer-focused innovation,” said Bill Staples, GitLab chief executive officer.
GitLab pulled off the fastest revenue growth of the whole group. Unsurprisingly, the stock is up 1.1% since reporting and currently trades at $47.44.
Is now the time to buy GitLab? Access our full analysis of the earnings results here, it’s free for active Edge members.
Best Q2: Fastly (NYSE: FSLY)
Taking its name from the core advantage it delivers to customers, Fastly (NYSE: FSLY) 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 revenues of $148.7 million, up 12.3% year on year, outperforming analysts’ expectations by 2.7%. The business had an exceptional quarter with EPS guidance for next quarter exceeding analysts’ expectations and an impressive beat of analysts’ EBITDA estimates.
The market seems happy with the results as the stock is up 32.7% since reporting. It currently trades at $8.64.
Is now the time to buy Fastly? Access our full analysis of the earnings results here, it’s free for active Edge members.
Slowest Q2: PagerDuty (NYSE: PD)
Born from the frustration of developers being woken up by unprioritized alerts, PagerDuty (NYSE: PD) is a digital operations management platform that helps organizations detect and respond to IT incidents, outages, and other critical issues in real-time.
PagerDuty reported revenues of $123.4 million, up 6.4% year on year, in line with analysts’ expectations. It was a slower quarter as it posted EPS guidance for next quarter missing analysts’ expectations and a significant miss of analysts’ billings estimates.
PagerDuty delivered the weakest performance against analyst estimates in the group. The company added 75 customers to reach a total of 15,322. Interestingly, the stock is up 6.1% since the results and currently trades at $16.57.
Read our full analysis of PagerDuty’s results here.
JFrog (NASDAQ: FROG)
Named after the amphibian that continuously evolves from egg to tadpole to adult, JFrog (NASDAQ: FROG) provides a platform that helps organizations securely create, store, manage, and distribute software packages across any system.
JFrog reported revenues of $127.2 million, up 23.5% year on year. This number surpassed analysts’ expectations by 3.5%. It was a strong quarter as it also put up an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ billings estimates.
The company added 25 enterprise customers paying more than $100,000 annually to reach a total of 1,076. The stock is up 23.7% since reporting and currently trades at $48.05.
Read our full, actionable report on JFrog here, it’s free for active Edge members.
Twilio (NYSE: TWLO)
Known for the clever "Twilio Magic" demo that had developers creating functioning communications apps in minutes, Twilio (NYSE: TWLO) provides a platform that enables businesses to communicate with their customers through voice, messaging, email, and other digital channels.
Twilio reported revenues of $1.23 billion, up 13.5% year on year. This result beat analysts’ expectations by 3.4%. Overall, it was a strong quarter as it also recorded a solid beat of analysts’ EBITDA estimates and accelerating customer growth.
The company added 14,000 customers to reach a total of 349,000. The stock is down 6.7% since reporting and currently trades at $114.40.
Read our full, actionable report on Twilio here, it’s free for active Edge members.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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