Software Development Stocks Q1 In Review: Datadog (NASDAQ:DDOG) Vs Peers

As the Q1 earnings season wraps, let’s dig into this quarter’s best and worst performers in the software development industry, including Datadog (NASDAQ:DDOG) 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 Q1. As a group, revenues beat analysts’ consensus estimates by 2.3% while next quarter’s revenue guidance was in line.

Luckily, software development stocks have performed well with share prices up 10.8% on average since the latest earnings results.

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 $761.6 million, up 24.6% year on year. This print exceeded analysts’ expectations by 2.8%. Overall, it was a satisfactory quarter for the company with an impressive beat of analysts’ annual recurring revenue estimates but a miss of analysts’ EBITDA estimates.

“Datadog executed solidly in the first quarter, with 25% year-over-year revenue growth, $272 million in operating cash flow, and $244 million in free cash flow,” said Olivier Pomel, co-founder and CEO of Datadog.

Interestingly, the stock is up 23.1% since reporting and currently trades at $130.18.

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

Founded in 2011, Fastly (NYSE:FSLY) provides content delivery and edge cloud computing services, enabling enterprises and developers to deliver fast, secure, and scalable digital content and experiences.

Fastly reported revenues of $144.5 million, up 8.2% year on year, outperforming analysts’ expectations by 4.8%. The business had an exceptional quarter with a solid beat of analysts’ EBITDA estimates.

Fastly pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 13.1% since reporting. It currently trades at $6.80.

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

Initially started as a hardware appliances company in the late 1990s, F5 (NASDAQ:FFIV) makes software that helps large enterprises ensure their web applications are always available by distributing network traffic and protecting them from cyberattacks.

F5 reported revenues of $731.1 million, up 7.3% year on year, exceeding analysts’ expectations by 1.7%. Still, it was a mixed quarter as it posted EPS guidance for next quarter missing analysts’ expectations.

Interestingly, the stock is up 8.1% since the results and currently trades at $286.48.

Read our full analysis of F5’s results here.

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 $119.8 million, up 7.8% year on year. This result was in line with analysts’ expectations. More broadly, it was a mixed quarter as it also recorded accelerating customer growth but EPS guidance for next quarter missing analysts’ expectations significantly.

PagerDuty had the weakest full-year guidance update among its peers. The company added 133 customers to reach a total of 15,247. The stock is down 11.8% since reporting and currently trades at $14.21.

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

Founded as an open-source project in 2011, GitLab (NASDAQ:GTLB) is a leading software development tools platform.

GitLab reported revenues of $214.5 million, up 26.8% year on year. This number surpassed analysts’ expectations by 0.7%. Overall, it was a strong quarter as it also recorded an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ billings estimates.

GitLab achieved the fastest revenue growth among its peers. The stock is down 13.3% since reporting and currently trades at $42.10.

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

Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.

Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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