The COVID-19 pandemic-induced adoption of cloud-based services and platforms by various consumers and businesses has allowed cloud computing solutions providers to generate substantial profits. Several features, including secure backups, enhanced storage and recovery, seamless workflows, and big data analytics, have motivated enterprises to migrate their operations to the cloud for better efficiency.
In addition to growing concerns over the Federal Reserve’s forthcoming interest rate increases, an unexpected decline in the first-quarter earnings of cloud computing giant Amazon.com, Inc. (AMZN) precipitated a tech sell-off last week. However, the surging demand for cloud solutions should keep driving the industry’s growth. Investor optimism in cloud computing stocks is evident from the WisdomTree Cloud Computing ETF’s (WCLD) 2.4% gains over the past week versus the SPDR S&P 500 Trust ETF’s (SPY) 0.7% loss. The global cloud computing services market is expected to grow at a 23.7% CAGR to $519 billion by 2027.
Therefore, we think it could be wise to bet on prominent players in this space, Dropbox, Inc. (DBX), Teradata Corporation (TDC), Brightcove Inc. (BCOV), SPS Commerce, Inc. (SPSC), and Benefitfocus, Inc. (BNFT).
Dropbox, Inc. (DBX)
San Francisco-based DBX provides online file storage and sharing services. The company operates its Dropbox platform, which offers a range of collaboration, editing, document management, and synchronization tools for individuals and business teams worldwide. It serves customers in professional services, technology, media, education, industrial, consumer and retail, and financial services industries.
On April 5, 2022, DBX introduced the newest iteration of Dropbox Backup, which has been upgraded with new features that include fast recovery, new restoration flow, settings to manage backups onto the computer, and more. As the demand for cloud sync services surges, the availability of Dropbox Backup should gain wide reach across the markets.
On February 2, DBX announced a collaboration with Amazon.com, Inc.’s (AMZN) Amazon Web Services (AWS) subsidiary to join the AWS Partner Network and provide content collaboration and e-signature solutions to more businesses. This move will help DBX gain a wider reach and allow AWS customers to purchase DBX’s Dropbox and HelloSign directly through the AWS Marketplace and bundle it with other products in one purchase, thereby improving remote collaboration and workflows for our customers.
For its fiscal year 2021 fourth quarter, ending December 31, 2021, DBX’s revenue increased 12.2% year-over-year to $565.50 million. The company’s non-GAAP gross profit came in at $457.40 million, representing a 13.3% rise from the prior-year period. Its non-GAAP income from operations came in at $168 million, up 31.7% from the year-ago period. DBX’s non-GAAP net income came in at $159.90 million, indicating a 35.6% year-over-year improvement. Its non-GAAP EPS increased 46.4% year-over-year to $0.41. DBX had cash and cash equivalents of $533 million as of Dec. 31, 2021.
Analysts expect DBX’s EPS to grow 3.9% year-over-year to $1.60 for its fiscal year 2022, ending Dec. 31, 2022. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The $2.33 billion consensus revenue estimate for the same fiscal year represents a 7.8% rise from the prior-year period. The company’s EPS is expected to grow at a 16.8% rate per annum over the next five years. Over the past week, the stock has gained 1.3% in price and closed yesterday’s trading session at $22.09.
DBX’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has an A grade for Quality and a B grade for Growth and Value. Click here to see the additional ratings for DBX’s Momentum, Sentiment, and Stability. DBX is ranked #10 of 81 stocks in the Technology – Services industry.
Teradata Corporation (TDC)
TDC in San Diego, Calif., focuses on providing a connected multi-cloud data platform for enterprise analytics. Its Teradata Vantage data warehouse and analytics platform allow customers to integrate and simplify their multi-cloud data and analytic ecosystems. It serves financial services, government, healthcare, manufacturing, retail, telecommunications, and travel/transportation industries and markets its solutions and services through a direct sales force.
On Feb. 10, 2022, TDC succeeded in the single system scale test completed on Amazon Web Services, Inc. (AWS), which helps enterprise customers run their complex analytic workload on a single system in the cloud at an unprecedented scale. TDC can successfully operationalize analytics at scale on a single system of more than 1,000 nodes with no system downtime or outages. This should help TDC witness growing demand from enterprises amid accelerated adoption of AI/ML, IoT, and 5G technologies and increased data-driven decision-making.
On Feb. 2, 2022, TDC announced a global partnership with Microsoft Corporation (MSFT) to integrate the Teradata Vantage data platform with Microsoft Azure. As the large-scale demand for modernizing their data analytics workloads with security, reliability, and elasticity rises, this integration of platforms combining their data, AI, and cloud capabilities should increase demand from enterprises and make data-driven decisions faster.
TDC’s total revenue for its fiscal 2021 fourth quarter, ended Dec. 31, 2021, increased 3.3% year-over-year to $475 million. The company’s non-GAAP gross profit came in at $300 million, representing a 3.1% rise from the prior-year period. Its non-GAAP operating income was $90 million, representing a 34.3% year-over-year rise. TDC’s non-GAAP net income came in at $64 million, up 52.4% from the prior-year period. And its non-GAAP EPS was $0.57, up 50% from the year-ago period. The company had $592 million in cash and cash equivalents as of Dec. 31, 2021.
The company surpassed the Street’s EPS estimates in each of the trailing four quarters. The $1.93 billion consensus revenue estimate for its fiscal year 2022,ending Dec. 31, 2022, indicates a marginal year-over-year improvement. Analysts expect TDC’s EPS to improve at a 6.1% rate per annum over the next five years. Over the past week, the stock has lost 1.7% and ended yesterday’s trading session at $41.28.
TDC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
It has an A grade for Value and Quality. Click here to see the additional ratings for TDC (Sentiment, Growth, Stability, and Momentum). TDC is ranked #12 in the Technology – Services industry.
Brightcove Inc. (BCOV)
Boston-based BCOV is a global cloud services provider for videos that allows customers to publish and distribute videos to Internet-connected devices. The company also offers professional support and training services. It serves sports and entertainment companies, broadcasters, publishers, corporations, government, educational institutions, and retail and e-commerce platforms through direct sales, referral and channel partners, resellers, and online platforms.
On Feb. 2, 2022, BCOV acquired Wicket Labs, an audience insights company that gives users visibility into content and subscriber analytics. BCOV’s intelligent video platform enables customers to deliver broadcast-quality video to viewers worldwide and measure its effectiveness with comprehensive, real-time analytics. This acquisition accelerates BCOV’s commitment to AI and ML to provide customers access to content and subscriber insights to make data-driven decisions to improve subscriber acquisition, conversions, engagement, and retention.
On Oct.14, 2021, BCOV acquired its long-term partner HapYak technology from Newsela, a leading K-12 instructional content platform, to help advance video interactivity. The HapYak technology will enable BCOV to generate valuable data-driven insights for businesses and dramatically enhance their viewer engagement, onboard employees more effectively, and close more sales faster. The company had $26.71 million in cash and cash equivalents as of March 31, 2022. Analysts expect the company’s revenue to hit $212.49 million for its fiscal year 2022, ending Dec. 31, 2022, representing a marginal rise from the prior-year period. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The company’s EPS is expected to grow at a 15% rate per annum over the next five years. The stock has gained 6.5% in price over the past week and closed yesterday’s trading session at $7.06.
BCOV’s POWR Ratings reflect its solid prospects. It has an overall B rating, which equates to Buy in our proprietary rating system.
The stock has an A grade for Value and a B grade for Stability. In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for BCOV’s Momentum, Quality, Sentiment, and Growth, here. BCOV is ranked #25 of 155 stocks in the Software – Application industry.
SPS Commerce, Inc. (SPSC)
SPSC provides cloud-based supply chain management solutions through the SPS Commerce, which supports retailers, suppliers, grocers, distributors, and logistics firms to orchestrate item data management, order fulfillment, inventory control, and sales analytics across all channels. The Minneapolis, Minn., company offers an assortment of products that enable accurate order management and rapid fulfillment, and a community product that accelerates vendor onboarding.
On March 16, 2022, SPSC announced the availability of its SPS Commerce Fulfillment solution on Oracle Corporation’s (ORCL) Oracle Cloud Marketplace. SPS Commerce Fulfillment works with Oracle Fusion Cloud Supply Chain & Manufacturing (SCM) to deliver a full-service EDI solution that provides omnichannel retail businesses with the flexibility and agility needed, connecting them with any trading partner EDI document or sales channel order. This should nurture SPSC’s long-standing relationship with ORCL.
On Nov. 3, 2021, SPSC acquired Genius Central, a software solution provider that is engaged in the natural and organic foods industry. This partnership should strengthen SPSC’s leadership in food retail, food distribution, and health and wellness.
SPSC’s revenues for its fiscal 2022 first quarter, ended March 31, 2022, increased 16.8% year-over-year to $105.19 million. The company’s gross profit came in at $69.80 million, indicating a 16.1% year-over-year improvement. Its income from operations was $16.51 million for the quarter, representing a 30.4% rise from the year-ago period. SPSC’s non-GAAP net income increased 30.1% year-over-year to $20.40 million. Its non-GAAP EPS came in at $0.55, up 27.9% from the prior-year period. And as of March 31, 2022, the company had $203.09 million in cash and cash equivalents.
Analysts expect the company’s EPS to reach $2.08 for its fiscal 2022, ending Dec 31, 2022, representing a 14.3% rise from the prior-year period. It surpassed the consensus EPS estimates in each of the trailing four quarters. The $444.91 million consensus revenue estimate for the same fiscal year indicates a 15.5% rise from the prior-year period. SPSC’s EPS is expected to grow at a 15% rate per annum over the next five years. Over the past week, the stock has gained 2.1% in price and ended yesterday’s trading session at $120.64.
SPSC’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to Buy in our proprietary rating system.
The stock has a B grade for Growth, Stability, Sentiment, and Quality. Click here to see the additional ratings for SPSC (Momentum and Value). SPSC is ranked #24 in the Software – Application industry.
Benefitfocus, Inc. (BNFT)
BNFT in Charleston, S.C. provides cloud-based benefits management technology solutions for employers and health plans. The company also provides implementation services to its customers to help ensure seamless deployment and effective utilization of its solutions.
On Nov.17, 2021, BNFT acquired Tango Health, an innovative software, and services company that offers Affordable Care Act (ACA) compliance and benefits decision-support solutions. This acquisition should enable BNFT to provide its customers with a best-in-class ACA compliance and reporting solution using Tango Health’s promising decision-support benefits, communication, and engagement capabilities.
For its fiscal 2021 fourth quarter, ended Dec. 31, 2021, BNFT’s non-GAAP net income increased 28.9% year-over-year to $11.27 million. The company’s non-GAAP EPS grew 33.3% from the prior-year period to $0.24. It had $31 million in cash and equivalents as of Dec. 31, 2021.
The company surpassed the Street’s EPS estimates in three of the trailing four quarters. BNFT’s EPS is expected to grow at a 20% rate per annum over the next five years. Over the past week, the stock has declined 4.4% in price and closed yesterday’s trading session at $10.82.
BNFT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
It has a B grade for Value and Sentiment. Click here to see the additional ratings for BNFT (Stability, Growth, Quality, and Momentum). The stock is ranked #17 in the Software – Application industry.
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DBX shares were trading at $21.76 per share on Tuesday afternoon, down $0.33 (-1.49%). Year-to-date, DBX has declined -11.33%, versus a -12.10% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...
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