Software Development Stocks Q2 Teardown: HashiCorp (NASDAQ:HCP) Vs The Rest

Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at HashiCorp (NASDAQ:HCP) and the best and worst performers in the software development industry.

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 mixed Q2. As a group, revenues beat analysts’ consensus estimates by 1.6% while next quarter’s revenue guidance was in line.

Big picture, the Federal Reserve has a dual mandate of inflation and employment. The former had been running hot throughout 2021 and 2022 but cooled towards the central bank's 2% target as of late. This prompted the Fed to cut its policy rate by 50bps (half a percent) in September 2024. Given recent employment data that suggests the US economy could be wobbling, the markets will be assessing whether this rate and future cuts (the Fed signaled more to come in 2024 and 2025) are the right moves at the right time or whether they're too little, too late for a macro that has already cooled.

Thankfully, software development stocks have been resilient with share prices up 9.1% on average since the latest earnings results.

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 $165.1 million, up 15.3% year on year. This print exceeded analysts’ expectations by 5.1%. Overall, it was a satisfactory quarter for the company with an impressive beat of analysts’ EBITDA estimates.

“The HashiCorp team delivered another solid performance in Q2 of FY25, with revenue growth of 15% year-over-year, and 10% growth in $100K customers year-over-year,” said Dave McJannet, CEO, HashiCorp.

HashiCorp pulled off the biggest analyst estimates beat of the whole group. The company added 16 enterprise customers paying more than $100,000 annually to reach a total of 934. The results were likely priced in, however, and the stock is flat since reporting. It currently trades at $33.84.

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

Best Q2: Bandwidth (NASDAQ:BAND)

Started 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 revenues of $173.6 million, up 19% year on year, in line with analysts’ expectations. The business had a strong quarter with an impressive beat of analysts’ EBITDA estimates and a significant improvement in its net revenue retention rate.

Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 21.8% since reporting. It currently trades at $17.80.

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

Weakest Q2: PagerDuty (NYSE:PD)

Started by three former Amazon engineers, PagerDuty (NYSE:PD) is a software-as-a-service platform that helps companies respond to IT incidents fast and make sure that any downtime is minimized.

PagerDuty reported revenues of $115.9 million, up 7.7% year on year, in line with analysts’ expectations. It was a slower quarter as it posted underwhelming revenue guidance for the next quarter.

PagerDuty delivered the weakest full-year guidance update in the group. The company lost 76 customers and ended up with a total of 15,044. As expected, the stock is down 3.4% since the results and currently trades at $17.66.

Read our full analysis of PagerDuty’s results here.

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 $401 million, up 30% year on year. This result beat analysts’ expectations by 1.6%. Taking a step back, it was a mixed quarter as it also produced an impressive beat of analysts’ EBITDA estimates but a miss of analysts’ billings estimates.

The stock is up 17.5% since reporting and currently trades at $87.42.

Read our full, actionable report on Cloudflare here, it’s free.

Akamai (NASDAQ:AKAM)

Founded in 1999 by two engineers from MIT, Akamai (NASDAQ:AKAM) provides software for organizations to efficiently deliver web content to their customers.

Akamai reported revenues of $979.6 million, up 4.7% year on year. This number met analysts’ expectations. Aside from that, it was a mixed quarter as its performance in some other areas of the business was disappointing.

The stock is up 12.4% since reporting and currently trades at $102.89.

Read our full, actionable report on Akamai here, it’s free.

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