Unpacking Q2 Earnings: PagerDuty (NYSE:PD) In The Context Of Other Software Development Stocks
As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the software development industry, including PagerDuty (NYSE:PD) 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 mixed Q2. As a group, revenues beat analysts’ consensus estimates by 1.6% while next quarter’s revenue guidance was in line.
Stocks--especially those trading at higher multiples--had a strong end of 2023, but this year has seen periods of volatility. Mixed signals about inflation have led to uncertainty around rate cuts. However, software development stocks have held steady amidst all this with share prices up 3.3% on average since the latest earnings results.
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. This print was in line with analysts’ expectations, but overall, it was a weak quarter for the company with underwhelming revenue guidance for the next quarter and decelerating customer growth.
PagerDuty delivered the weakest full-year guidance update of the whole group. The company lost 76 customers and ended up with a total of 15,044. Unsurprisingly, the stock is down 2.2% since reporting and currently trades at $17.88.
Read our full report on PagerDuty here, it’s free.
Best 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 $645.3 million, up 26.7% year on year, outperforming analysts’ expectations by 3.2%. It was a mixed quarter for the company with an impressive beat of analysts’ billings estimates but decelerating growth in large customers.
However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $108.96.
Is now the time to buy Datadog? Access our full analysis of the earnings results here, it’s free.
JFrog (NASDAQ:FROG)
Named after the founders' affinity for frogs, JFrog (NASDAQ:FROG) provides a software-as-a-service platform that makes developing and releasing software easier and faster, especially for large teams.
JFrog reported revenues of $103 million, up 22.4% year on year, in line with analysts’ expectations. It was a weak quarter for the company with underwhelming revenue guidance for the next quarter and decelerating growth in large customers.
JFrog had the weakest performance against analyst estimates in the group. The company added 17 enterprise customers paying more than $100,000 annually to reach a total of 928. As expected, the stock is down 13.6% since the results and currently trades at $29.42.
Read our full analysis of JFrog’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 $399.2 million, up 19.9% year on year, surpassing analysts’ expectations by 1.8%. More broadly, it was a mixed quarter for the company with a decent beat of analysts’ billings estimates but a decline in its gross margin.
The stock is up 21.1% since reporting and currently trades at $49.04.
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 $165.1 million, up 15.3% year on year, surpassing analysts’ expectations by 5.1%. Zooming out, it was a slower quarter for the company with decelerating growth in large customers.
HashiCorp pulled off the biggest analyst estimates beat among its peers. The company added 16 enterprise customers paying more than $100,000 annually to reach a total of 934. The stock is flat since reporting and currently trades at $33.75.
Read our full, actionable report on HashiCorp here, it’s free.
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