The pandemic may be coming to a close – we hope! – but the boom in Software-as-a-Service (“SaaS”) stocks may be just beginning.
The thinking last year was about the expanding market in the depths of the pandemic for services catering to life online. This idea merged with the evolution of the software space granting boomtimes to the SaaS space as droves of companies shifting from selling software products with licenses in a product cycle to selling subscriptions to a software service that would be continuously improved and updated.
January and February resulted in a major peak in many of these stocks, which have pulled back sharply as investors move on to a portfolio of stocks that cater to the “reopening theme” – movie theaters, restaurants, hotels, cruise liners. In short, we went from online life back to the real world, in investment allocations at the margin.
However, we will soon find out that it only takes 90 days to concretize new habits. And the pandemic lasted a lot longer than 90 days. If you think people are suddenly going to stop ordering food delivery and shopping online – or subscribing to SaaS services – you’re in for a wake-up call.
The sizeable pullbacks in these stocks represent an opportunity, especially for those that cater to a new market or space (ie, healthcare services).
With that in mind, we take a look at some of the most interesting names in the space, including Workday Inc (NASDAQ:WDAY), Shopify Inc (NYSE:SHOP), USA Equities Corp (OTCMKTS:USAQ), and Adobe Inc (NASDAQ:ADBE)
Workday Inc (NASDAQ:WDAY) bills itself as a company that provides enterprise cloud applications worldwide. Its applications help its customers to manage critical business functions and optimize their financial and human capital resources.
The company offers Workday Financial Management application that provides functions of general ledger, accounting, accounts payable and receivable, cash and asset management, revenue management, and grants management, as well as project and resource management, time and expense tracking, project billing, revenue recognition, financial reporting, and analytics.
Workday Inc (NASDAQ:WDAY) recently announced plans to deliver Workday Payroll for Australia and Workday Payroll for Germany. According to its release, Workday Payroll for Australia and Workday Payroll for Germany will leverage the company’s core payroll foundation in the cloud to provide human capital management (HCM), time, absence, and a payroll solution in a single system. With worker data in Workday HCM flowing seamlessly to Workday Payroll, customers can make their payroll processes more efficient and accurate, and better support their compliance with regulatory laws and standard business practices in these markets.
“Workday continues to be adopted by some of the largest organizations in Europe and Asia-Pacific, and now is the time to begin expanding our cloud payroll in these markets,” said Adam Kovalevsky, general manager, Payroll, Workday. “With Workday Payroll for Australia and Workday Pyroll for Germany, customers will have the control, flexibility, and insight they need to seamlessly support compensation, benefits, and compliance changes while delivering an exceptional experience for their employees.”
The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 3% in that timeframe. Shares of the stock have powered higher over the past month, rallying roughly 9% in that time on strong overall action.
Workday Inc (NASDAQ:WDAY) managed to rope in revenues totaling $1.2B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 15.8%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($3B against $4.2B, respectively).
USA Equities Corp (OTCMKTS:USAQ) is an interesting emerging SaaS and medical device play in the healthcare technology space. The company is working to enable primary care physicians to increase their revenues by providing them with relevant, value-based tools to evaluate, and treat chronic disease through reimbursable procedures. Its products will enable physicians to diagnose and treat patients with chronic diseases which they historically have referred to specialists.
The company’s near-term objective is to acquire five thousand physicians by 2023, which would generate $17.9 million on the topline. According to its materials, all current and future products and services will be sold through the same distribution channel and customer base allowing it to generate additional revenue without the customer acquisition cost.
USA Equities Corp (OTCMKTS:USAQ) most recently announced that it has entered into a distribution agreement with a prominent physician management services organization (MSO) for its AllergiEnd® allergy diagnostic and allergen immunotherapy products and services. The MSO will facilitate the working relation between USAQ and its physician members, as well as provide marketing and advertising support. Given the size of the MSO’s member roster, the roll out will be done in stages so as to ensure adequate training and staff support.
“Today’s announcement is further evidence of our continued progress and momentum as we expand our independent medical provider practice network. The growing interest in AllergiEnd®’s allergy diagnostic services and allergen immunotherapy products reflects the attractiveness of our value-based tools to proactively address chronic disease, provide preventive care as well as enable the broad market of general practitioner physicians to broaden their practices and revenue base,” said Troy Grogan, CEO of USA Equities Corp.
“Our new distributor relationship announced today has a significant growing national physician customer base and footprint which offers us a strong platform from which to increase our base of clients and over time potentially launch additional products. We are entering the second half of fiscal 2021 very well positioned and highly energized to grow our client and recurring revenue base, continue to increase our industry visibility and progress our work to expand our product portfolio as we further execute on our growth strategy,” concluded Grogan.
USA Equities Corp (OTCMKTS:USAQ) is projecting entry level monthly subscriptions will be $299/month or $3,588 per year. Its near-term projection is to acquire 5,000 physician clients by the end of 2023 and over 20,000 physicians in the medium to longer term, which is still less than five percent of the total target physician audience in the US today. According to the Journal of Pharma and Healthcare: “There are over 450,000 primary care physicians, including licensed nurse practitioners, in the United States.” With a range between $3,588 – $10,000 per physician per year, USAQ is targeting an addressable annual market of roughly $1.6 billion. Capturing just 5% of this market would generate revenue of at least $87 million.
Shopify Inc (NYSE:SHOP) trumpets itself as an e-commerce company that provides a cloud-based multi-channel commerce platform for small and medium-sized businesses in Canada, the United States, the United Kingdom, Australia, and internationally.
Its platform provides merchants with a single view of business and customers in various sales channels, including Web and mobile storefronts, physical retail locations, social media storefronts, and marketplaces; and enables to manage products and inventory, process orders and payments, fulfill and ship orders, build customer relationships, source products, leverage analytics and reporting, and access financing.
Shopify Inc (NYSE:SHOP) recently announced the results from its Annual Meeting of Shareholders which took place today. All director nominees were re-elected to the Board of Directors and PricewaterhouseCoopers LLP was appointed as auditors.
According to its release, shareholders approved the second amendment and restatement of each of the Company’s Stock Option Plan and the Company’s Long Term Option Plan and approved all unallocated options under the Stock Option Plan, as amended, and all unallocated awards under the Long Term Option Plan, as amended, all as further described in the Company’s management information circular dated April 22, 2021. Shareholders approved the advisory resolution on the approach to executive compensation disclosed in the Circular.
Shares of the stock have powered higher over the past month, rallying roughly 18% in that time on strong overall action.
Shopify Inc (NYSE:SHOP) pulled in sales of $988.6M in its last reported quarterly financials, representing top line growth of 110.3%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($7.9B against $495.1M).
Adobe Inc (NASDAQ:ADBE) bills itself as a diversified software company worldwide. Its Digital Media segment provides tools and solutions that enable individuals, small and medium businesses, and enterprises to create, publish, promote, and monetize their digital content.
Its flagship product is Creative Cloud, a subscription service that allows customers to download and install the latest versions of its creative products. This segment serves traditional content creators, Web application developers, and digital media professionals, as well as their management in marketing departments and agencies, companies, and publishers.
Adobe Inc (NASDAQ:ADBE) most recently reported financial results for its second quarter fiscal year 2021 ended June 4, 2021, including news that Adobe achieved quarterly revenue of $3.84 billion in its second quarter of fiscal year 2021, which represents 23 percent year-over-year growth. Diluted earnings per share was $2.32 on a GAAP basis and $3.03 on a non-GAAP basis.
“Adobe had an outstanding second quarter as Creative Cloud, Document Cloud and Experience Cloud continue to transform work, learn and play in a digital-first world,” said Shantanu Narayen, president and CEO, Adobe. “Our innovative product roadmap and unparalleled leadership in creativity, digital documents and customer experience management position us for continued success in 2021 and beyond.”
The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 3% in that timeframe.
Adobe Inc (NASDAQ:ADBE) pulled in sales of $3.8B in its last reported quarterly financials, representing top line growth of 22.8%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($5.8B against $6.1B, respectively).