Top 3 SaaS Stocks to Watch: Smartsheet, CCC Intelligent Solutions, and DocuSign
SaaS heads the other competitors in the cloud computing business as it is highly flexible, scalable, low-cost, integrative, accessible around the world, and most importantly, provides its users with support. Modern businesses depend on SaaS for efficiency and innovation wherein its flexibility, collaborative tools, and robust security provide it with a competitive advantage in their businesses.
As that digital transformation continues, savvy investors should keep an eye on leading SaaS stocks – Smartsheet Inc. (SMAR), CCC Intelligent Solutions Holdings Inc. (CCCS) and DocuSign, Inc. (DOCU). All are well-poised to easily tap the expanding opportunities in the space.
Top SaaS Stocks for 2024: Smartsheet, CCC Intelligent Solutions, and DocuSign
Today, cloud-based software services dominate the market more than the traditional software applications. Organizations invest in digital transformation adopting trends that meet various needs of the rising demand of industries and trends to enhance system connectivity, better data management, and many more.
Based on that reason, Gartner had projected the SaaS spending will rise by 20% this year to $247.20 billion. This was supported by the change in policies by the General Services Administration in purchasing software for governments through their upfront payment option that stabilizes the market and increases investment opportunities in this vast horizon of SaaS growth.
Looking forward, according to a report published by Research and Markets, the global SaaS market will grow at 6.2% CAGR, reaching $325.84 billion by 2028-a testament to the dynamic growth and innovation potential of this industry.
Commuting with the positive trends coming up in the SaaS industry let’s now penetrate deeper into the fundamentals of three growth-hefty software – SAAS stocks starting with #3.
Stock #1: Smartsheet Inc. (SMAR)
SMAR offers an enterprise-level work management platform for companies to plan, capture, manage, automate, and report on work at scale. The company provides cloud-based software delivered globally with a subscription model, offering products like Smartsheet, WorkApps, and Premium Apps and Connectors for business work management needs.
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July 9, SMAR launched Amazon Q Business, an AI assistant designed to support knowledge management, thus promoting efficiency in their cloud operations. This move underscores the efforts of the company to maximize state-of-the-art technology use in order to enable employees to work better and have a direct impact on the quality of services provided to the customers.
The company unveiled new AI and resource management features on May 14 that deliver actionable insights to businesses and enhanced operational visibility. SMAR continues strengthening its market presence through the infusion of superior technologies into the expanding industry, hence supporting business development and innovation across diverse sectors.
SMAR’s total revenue for fiscal 2025 second quarter that ended July 31, 2024 increased by 17.3% year-over-year to $276.41 million. Its non-GAAP operating income jumped 135.7% from the year-ago value to $45.30 million.
Its non-GAAP net income and non-GAAP net income per share also improved by 180% and 175%, respectively, compared with the same period last year to $61.64 million and $0.44, respectively.
Analysts are expecting SMAR’s fiscal 2025 third-quarter revenues and Eps to jump 15.4% and 90.3% from the year-earlier quarter to $283.85 million and $0.30, respectively. A more significant takeaway, however, is that the company has outperformed top-line and bottom-line estimates for its last four reported quarters in a row.
SMAR rose 16.4 percent in the last three months and 21.1 percent over the past six months to close out the last trading session at $50.56.
Bright Prospects For SMAR
Overall, the prospects of SMAR look bright. This is true for its POWR Ratings.
An overall grade of B equates to a Buy within our proprietary rating system. The POWR Ratings compute using 118 different factors, each weighted to an optimal degree.
SMAR has an A grade for Growth and Sentiment and a B for Quality. It ranks #5 out of 18 stocks in the A-rated Software – SAAS industry.
Stock #2: CCC Intelligent Solutions Holdings Inc. (CCCS)
CCCS offers a SaaS platform for the P&C insurance economy to its customers. The cloud-based software by the firm becomes a service platform, hence connecting trading partners, facilitating commerce, and enabling digital workflow across the platform, powered by AI.
CCquisite On September 4, CCCS launched CCC Payroll, a solution to simplify the management of payroll at collision repair shops. Fully implemented in the CCC ONE Business Platform, CCCS adds this to the productivity increases for operations within the business. The innovation may fortify CCCS’ market position as it will encourage customer adoption and, thus, growth.
Early this July, CCCS rolled out CCC Intelligent Reinspection for auto insurers, a solution leveraging AI to accelerate the review of repair estimates. With automation and ease that simplifies current workflows, CCCS is today cashing in on the AI revolution, sustaining market share gains while establishing a platform for growth and cutting-edge technology.
Revenues for the fiscal 2024 second quarter that ended June 30, 2024, increased 9.9% year-over-year to $232.62 million. Adjusted gross profit was $182.08 million and shows a 12.4% growth over the prior year quarter with an adjusted gross profit margin of 78%.
Net income for the company adjusted was $56.19 million or $0.09 per share, showing 17.4% and 28.6% increases year over year. The adjusted EBITDA likewise increased by 18.4% year-over-year at $95.79 million.
The consensus revenue and EPS for the fiscal third quarter that would end in September 2024 stands at $237.36 million and $0.09, respectively, reflecting a year-over-year change of 7.3% and 2%.
Additionally, CCCS has an excellent track record when it comes to surprise; it topped the same revenue and EPS estimates in each of the four trailing quarters.
Over the last month, the stock has moved up 5.8% and closed at $10.75 in the latest trading session.
CCCS’ POWR Ratings are positive to overall. The B rating on this stock converts over to a Buy in our own rating system.
CCC received a grade of B for both Growth and Stability and Sentiment. This stock ranks #3 out of 18 stocks for the Software – SAAS industry.
Stock #3: DocuSign, Inc. (DOCU)
DOCU offers e-signature products, thus allowing agreements to be signed globally from multiple devices. In all, the company has five products, among them: eSignature, Contract Lifecycle Management, Gen for Salesforce, Identify and Monitor, and Document Generation.
On June 4, DOCU announced a new Connector for SAP Ariba solutions, which automates workflows between DOCU’s CLM and SAP Ariba to further the source-to-pay process. Launching globally in September, this is an innovation that will thus cement DOCU leadership in e-signature technology, enhancing its market position.
On May 31, DOCU finalized its acquisition of Lexion, a privately held AI-powered agreement management company. That strategic move will enhance the capabilities of DOCU’s Intelligent Agreement Management (IAM), thereby allowing DOCU to offer advanced AI-assisted solutions while further solidifying its position in this fast-growing IAM space.
Total revenues by DOCU for fiscal 2025 second quarter that ended July 31, 2024 reported a 7% YoY gain up to $736.03 million. The non-GAAP income from operations were set at $236.16 million as of last quarter.
Earnings of the net incomes of DOCU went up to $200.99 million and $0.97 per share on a non-GAAP basis. The money increments year over year stood at 34.3% and 34.7%, respectively.
Street expects DOCU’s revenue and EPS for the fiscal 2025 third quarter (ending October 2024) to jump 6.4% and 10.2% year over year to $745.31 million and $0.87, respectively. The company also has topped estimates for all of the last four quarters, which is pretty good.
DOCU shares have risen 10.1% over the last three months and 21.8% over the last year to close at $56.49 in the last trading session.
The POWR Ratings of DOCU show that it has attractive prospects. The overall rating for the stock is an A, which translates to a Strong Buy in our proprietary rating system.
DOCU received an A grade for Quality as well as a B for Value and Growth. It topped the Software – SaaS industry.
Beyond what you have just read above, we have assigned grades for DOCU in terms of Momentum, Stability, and Sentiment. Get all the DOCU’s ratings.
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DOCU traded $1.29 (+2.28%) higher in premarket trading Friday. Year-to-date, DOCU has fallen -4.98%, compared with a 18.37% gain in the benchmark S&P 500 index over the same time frame.