The global software sector is thriving, fueled by rapid digital transformation, the rise of cloud computing, and breakthroughs in AI and automation. As businesses increasingly turn to software solutions for efficiency and innovation, the sector’s growth trajectory remains robust, bolstered by subscription-based models and cutting-edge technologies.

Within this dynamic landscape, some software companies are defying traditional valuation norms with high price-to-earnings (P/E) ratios. Leading software stocks CyberArk Software Ltd. (CYBR), AvePoint, Inc. (AVPT), and Okta, Inc. (OKTA) are thriving by delivering cutting-edge solutions that address critical challenges in identity security, data management, and cloud computing.

The global software sector has experienced remarkable growth, driven by rapid digital transformation, the proliferation of cloud computing, and the adoption of AI and automation across industries. Emerging trends such as mobile-first software development and the transition to SaaS models are reshaping how software is consumed and delivered.

Further, the widespread adoption of smartphones and tablets has made mobile applications an integral part of everyday life, while SaaS platforms provide businesses with scalable and cost-efficient solutions. According to Precedence Research reports, the global software is projected to reach approximately $2.25 trillion by 2034, growing at a CAGR of 11.8%.

Considering these conducive trends, let’s examine the software stocks in detail:

CyberArk Software Ltd. (CYBR)

CYBR specializes in identity security solutions, offering products such as Privileged Access Manager, Endpoint Privilege Manager, Secure Desktop, and workforce identity services. These solutions cater to industries like financial services, healthcare, retail, and government agencies, ensuring secure access and robust identity management.

In terms of forward non-GAAP P/E, CYBR is trading at 116.62x, 358.4% higher than the industry average of 25.44x.

On December 5, CYBR announced the launch of an underwritten secondary public offering. The offering includes 1,142,538 ordinary shares of CyberArk, with a par value of NIS 0.01 per share.

During the fiscal third quarter that ended September 30, 2024, CYBR’s total revenue increased 25.6% year-over-year to $240.10 million. Its gross profit grew 29% from the year-ago value to $192.92 million. In addition, the company’s non-GAAP net income reached $45.14 million, up 130.2% from the same quarter last year, and non-GAAP net income per share was $0.94, indicating an increase of 123.8% from the prior-year quarter.

Analysts expect CYBR’s EPS and revenue for the fiscal year ending December 31, 2024, to increase 163.3% and 31.3% year-over-year to $2.95 and $987.52 million, respectively. It surpassed the street EPS and revenue estimates in each of the trailing four quarters, which is promising.

Over the past year, the stock has gained 58.1% to close the last trading session at $344.55. It has surged 26% over the past six months.

CYBR’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

CYBR has an A grade in Growth and Sentiment and a B in Momentum and Quality. It is ranked #9 out of 20 stocks in the A-rated Software – Security industry.

Beyond what we have stated above, we also have given CYBR grades for Value and Stability. Get all the CYBR’s ratings here.

Okta, Inc. (OKTA)

OKTA provides identity and access management solutions to secure identities for organizations globally. Its product suite includes Single Sign-On, Adaptive Multi-Factor Authentication, API Access Management, and other tools that enable secure, streamlined access across cloud, mobile, and on-premises environments.

In terms of forward non-GAAP P/E, OKTA is trading at 30.50x, 19.9% higher than the industry average of 25.44x.

OKTA’s total revenue increased 13.9% year-over-year to $665 million in the fiscal 2025 third quarter that ended on October 31, 2024. Its non-GAAP operating income came in at $138 million, up 62.4% year-over-year. Moreover, its non-GAAP net income and net income per share stood at $121 million and $0.67, respectively, representing increases of 53.2% and 52.3% over the prior-year quarter.

Analysts expect OKTA’s revenue for the fiscal fourth quarter (ending January 31, 2025) to increase 10.6% year-over-year to $669.10 million. Its EPS for the same quarter is expected to grow 16.9% from the prior year to $0.74. In addition, it surpassed the consensus EPS and revenue estimates in each of the trailing four quarters.

The stock climbed 62.2% over the past six months and 107.8% over the past year to close the last trading session at $76.93.

OKTA’s bright prospects are apparent in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.

It has an A grade for Growth and a B for Momentum. It is ranked #10 out of 20 stocks in the A-rated Software – Security industry.

Click here to see OKTA’s ratings for Value, Stability, Sentiment, and Quality.

AvePoint, Inc. (AVPT)

AVPT offers cloud-native data management and SaaS solutions, addressing data challenges for organizations using platforms like Microsoft, Google, and AWS, alongside productivity tools, licensing, and support services globally.

In terms of forward non-GAAP P/E, AVPT is trading at 97.85x, 284.7% higher than the industry average of 25.44x.

On November 19, AVPT announced at Microsoft Corporation (MSFT) Ignite the launch of industry-first Microsoft 365 Copilot benchmarking capabilities within its AVPT tyGraph solution. This innovation provides organizations with critical insights into AI adoption and usage patterns, enhancing their ability to assess and optimize the effectiveness and sustainability of Microsoft 365 Copilot.

AVPT’s total revenue increased 22.1% year-over-year to $ 88.80 million in the fiscal third quarter that ended on September 30, 2024. Its non-GAAP operating income came in at $ 17.83 million, up 91.2% year-over-year. In addition, the company’s non-GAAP net income reached $116.60 million, compared to a loss of $4.21 million in the prior year quarter, and non-GAAP net income per share was $0.01, compared to a loss of $0.02 in the prior year quarter.

Street expects AVPT’s revenue for the fiscal year (ending December 31, 2024) to increase 21.2% year-over-year to $ 329.38 million. Its EPS for the same year is expected to grow 113.5% from the prior year to $0.17. In addition, it surpassed the consensus revenue estimates in each of the trailing four quarters.

The stock climbed 62.2% over the past six months and has returned 107.8% over the past year to close the last trading session at $16.62.

AVPT’s bright prospects are apparent in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.

It has a B for Growth, Momentum, and Quality. The company operates within the Technology – Services industry, and is ranked #24 out of 79 stocks.

Click here to see AVPT’s ratings for Value, Stability, and Sentiment.

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CYBR shares were unchanged in premarket trading Thursday. Year-to-date, CYBR has gained 3.42%, versus a 0.58% rise in the benchmark S&P 500 index during the same period.

About the Author: Kritika Sarmah

Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities. More...

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