Software Development Stocks Q2 Teardown: Bandwidth (NASDAQ:BAND) Vs The Rest

As the Q2 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the software development industry, including Bandwidth (NASDAQ:BAND) 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 8.2% on average since the latest earnings results.

Bandwidth (NASDAQ:BAND)

Powering communications for tech giants like Microsoft, Google, and Zoom, Bandwidth (NASDAQ:BAND) provides cloud-based communications software and APIs that enable businesses to embed voice, messaging, and emergency services into their applications and platforms.

Bandwidth reported revenues of $180 million, up 3.7% year on year. This print exceeded analysts’ expectations by 0.6%. Despite the top-line beat, it was still a mixed quarter for the company with an impressive beat of analysts’ sales and operating profits estimates but EBITDA guidance for next quarter missing analysts’ expectations.

Bandwidth delivered the slowest revenue growth of the whole group. Interestingly, the stock is up 8.1% since reporting and currently trades at $17.55.

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

Best Q2: Cloudflare (NYSE:NET)

With a massive network spanning more than 310 cities in over 120 countries, Cloudflare (NYSE:NET) provides a global network that delivers security, performance and reliability services to protect websites, applications, and corporate networks.

Cloudflare reported revenues of $512.3 million, up 27.8% year on year, outperforming analysts’ expectations by 2.3%. The business had a very strong quarter with a solid beat of analysts’ billings estimates and EPS guidance for next quarter exceeding analysts’ expectations.

The market seems happy with the results as the stock is up 9.1% since reporting. It currently trades at $226.50.

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

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 5.7% since the results and currently trades at $16.51.

Read our full analysis of PagerDuty’s results here.

Akamai Technologies (NASDAQ:AKAM)

With a massive distributed network spanning 4,100+ points of presence in nearly 130 countries, Akamai Technologies (NASDAQ:AKAM) provides a global distributed cloud platform that helps businesses deliver, secure, and optimize their digital experiences online.

Akamai Technologies reported revenues of $1.04 billion, up 6.5% year on year. This print beat analysts’ expectations by 2.2%. It was a very strong quarter as it also produced EPS guidance for next quarter exceeding analysts’ expectations and full-year EPS guidance exceeding analysts’ expectations.

The stock is up 1.7% since reporting and currently trades at $76.22.

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

Datadog (NASDAQ:DDOG)

Named after a database the founders had to painstakingly look after at their previous company, Datadog (NASDAQ:DDOG) provides a software platform that helps organizations monitor and secure their cloud applications, infrastructure, and services.

Datadog reported revenues of $826.8 million, up 28.1% year on year. This result surpassed analysts’ expectations by 4.5%. Overall, it was a strong quarter as it also logged EPS guidance for next quarter exceeding analysts’ expectations and full-year EPS guidance exceeding analysts’ expectations.

Datadog achieved the biggest analyst estimates beat among its peers. The company added 80 enterprise customers paying more than $100,000 annually to reach a total of 3,850. The stock is up 1.2% since reporting and currently trades at $138.71.

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

Market Update

In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.

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