With the job market gradually expanding in the post-pandemic era, stock market indices are expected to witness sustained bullish trends for the rest of the year. Moreover, the global software as a service (SaaS) market is estimated to progress at a CAGR of over 11% by 2025. Increasing adoption of cloud platforms and rising demand owing to the continued digitization of businesses should drive the software industry’s growth.
Also, according to Statista, in 2021, global spending on IT services is expected to reach $1.2 trillion, an improvement of 11.2% year-over-year. Moreover, investors’ interest in the software stocks is evident from the iShares Expanded Tech-Software Sector ETF’s (IGV) 9.9% returns over the past month versus the SPDR S&P 500 ETF Trust’s (SPY) 8.2% gains.
Amplitude, Inc. (AMPL)
AMPL provides a digital optimization system to analyze customer behavior within digital products. Its product services include Amplitude analytics; Amplitude Recommend; Amplitude Experiment; Amplitude Behavioral Graph. It also provides customer support services.
On September 21, 2021, Spenser Skates, CEO and co-founder of Amplitude, said, “The acceleration of the digital world has put digital products at the center of business. Digital products are driving how businesses operate, go to market and generate revenue. As organizations make the shift to product-led growth, they are turning to Amplitude to help drive business outcomes.”
AMPL’s revenue came in at $39.3 million for the period ended June 30, 2021, up 65.7% year-over-year. Its gross profit came in at $27.12 million, up 64.5% year-over-year. Its cash and cash equivalents came in at $291.06 million for the period ended June 30, 2021, compared to $117.78 million for the period ended December 31, 2020.
Analysts expect AMPL’s revenue to grow 41.2% year-over-year in the next year to $227.65 million. Its EPS is expected to grow at 36.7% in the next year. Over the past month, the stock has gained 60.2% to close Friday’s trading session at $83.68.
Cloudflare, Inc. (NET)
NET operates a cloud platform that delivers a range of network services to businesses worldwide. It provides an integrated cloud-based security solution to secure a range of combinations of platforms, including public cloud, private cloud, on-premise, software-as-a-service applications, and Internet of Things (IoT) devices.
On October 18, 2021, NET announced that it would work with Microsoft, Yandex, and other leading search engines to help businesses get the most timely and relevant search results to their customers. It is set to participate in the IndexNow.org initiative. Matthew Prince, co-founder and CEO of Cloudflare, said, “Today, we’re taking that one step further by working with Microsoft and other major search engines to help any website owner reduce inefficiencies while also delivering their users reliable, relevant and timely online experiences.”
NET’s revenue increased 51% year-over-year to $172.3 million for the fiscal third quarter ended September 30, 2021. The company’s gross profit came in at $134.82 million, up 54.7% year-over-year. Its cash and cash equivalents came in at $618.23 million for the period ended September 30, 2021, compared to $108.89 million for the period ended December 31, 2020.
For fiscal 2021, analysts expect NET’s revenue to increase 48.5% year-over-year to $640.04 million. Its EPS is expected to increase 100% next year. The stock has soared 149.6% over the past six months and 57.1% over the past month to close Friday’s trading session at $197.26.
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AMPL shares were trading at $80.69 per share on Monday afternoon, down $2.99 (-3.57%). Year-to-date, AMPL has gained 47.24%, versus a 26.50% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...
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