Due to the uncertainty caused by the continuing spread of the COVID-19 omicron variant, software companies are expected to witness rising demand as businesses make significant new investments in advanced software solutions to facilitate remote working. Furthermore, the adoption of cloud platforms is expected to accelerate as the world’s dependence on remote activities increases.
According to a Forrester’s Research report, event-driven architecture, collaborative work management, and an increase in the use of AI bots are expected in software development next year. Also, the trends in cybersecurity measures, customer retention, low-code development adoption, and other software solutions should propel the industry’s growth.
Given this backdrop, we think software stocks Asana, Inc. (ASAN) and Black Knight, Inc. (BKI), which spiked more than 10% in price last week despite heightened market volatility, could be good additions to one’s watchlist.
Asana, Inc. (ASAN)
San Francisco-based ASAN is a work management platform that enables individuals, team leads, and executives to organize daily tasks and strategic initiatives. The company enables its users to communicate, monitor status, and oversee work across projects to gain real-time insights. ASAN provides various features in its platform, including timeline, app integration, automation, and other features.
In October, ASAN expanded its Asana Partners network of IT partners to help complex enterprises to adapt security and scalability. Through this expansion, ASAN should be able to offer enterprises even more control and flexibility as they continue navigating the hybrid work environment.
ASAN’s revenues for the fiscal third quarter, ended October 31, 2021, increased 70.3% year-over-year to $100.34 million. The company’s gross profit grew 75.9% from its year-ago value to $90.76 million. Its net loss decreased 5.5% from the prior-year quarter to $69.28 million. Also, the company’s loss per share declined 43.1% year-over-year to $0.37.
Analysts expect ASAN’s revenue to increase 63.9% year-over-year to $372 million for its fiscal 2022. The company has an impressive earnings surprise history; it beat the consensus EPS in each of the trailing four quarters. Its EPS is expected to grow 17.2% in the current year. The stock has surged 159.2% in price over the past nine months and 12.4% over the past week.
Black Knight, Inc. (BKI)
BKI provides integrated software, data, and analytics solutions in North America and Internationally that operate through Software Solutions and Data and Analytics segments. The Jacksonville, Fla.-based concern’s Software Solutions segment offers software and hosting solutions, whereas its Data and Analytics segment offers property ownership data, servicing data, automated valuation models, collateral risk scores, multiple listing services, and other data solutions.
This month, Vistaril Credit Union, a credit union in Northeast Florida, entered an agreement to use BKI’s integrated, end-to-end mortgage origination and servicing solutions, including its innovative Empower loan origination system (LOS) and the industry-leading MSP servicing system. Through this agreement, BKI should support Vistaril’s growing business operations and offer a better banking experience to its members.
During the third quarter, ended September 30, 2021, BKI’s revenues increased 20.9% year-over-year to $378 million. The company’s operating income grew 39% from its year-ago value to $82.7 million. Its net earnings came in at $46.3 million. Also, the company’s EPS amounted to $0.34 during the period.
BKI’s revenue for its fiscal year 2021 is expected to increase 18.6% year-over-year to $1.47 billion. It has surpassed the consensus EPS in each of the trailing four quarters. The company’s EPS is estimated to grow 11.4% in the current year and 13.6% next year. The stock has soared 14.5% in price over the past three months and 11.4% over the past week.
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ASAN shares were trading at $76.43 per share on Tuesday morning, down $0.04 (-0.05%). Year-to-date, ASAN has gained 158.65%, versus a 23.89% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...
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