Pandemic-induced digitization across industries, the widespread adoption of cloud-based solutions, and increasing remote workforces are boosting the software-as-a-service (SaaS) market. Furthermore, with companies focusing on advanced technology, such as artificial intelligence (AI), machine learning (ML), internet of things (IoT), cloud computing, and analytics, the industry’s prospects look bright.
Although major tech stocks have been suffering volatile price swings this year due to in-part to the Federal Reserve’s interest rate increases, the sector is well-positioned for future growth. The global software as a service (SaaS) market is expected to grow at an 18.3% CAGR to reach $703.19 billion by 2030.
Informatica Inc. (INFA)
INFA in Redwood City, Calif., is an enterprise cloud data management company that has pioneered an AI-powered cloud-native, end-to-end data management platform–Informatica Intelligent Data Management Cloud (IDMC)–that connects, manages, and unifies data across any multi-cloud, hybrid system.
On May 25, 2022, prominent software company Oracle Corporation (ORCL) named INFA as a preferred partner for enterprise cloud data integration and data governance for data warehouse and lakehouse solutions on Oracle Cloud Infrastructure (OCI). Integrating INFA’s AI-powered, cloud-native, Intelligent Data Management Cloud (IDMC) with ORCL’s offerings will deliver industry-leading cloud data management, integration, and governance solutions and help enterprises facilitate data platform modernization by moving on-premises workloads to OCI.
For its fiscal 2022 first quarter, ended March 31, 2022, INFA’s total revenues increased 8.6% year-over-year to $362.35 million. The company’s gross profit came in at $278.55 million, indicating an 8.7% year-over-year improvement. Its non-GAAP income from operations was $83.39 million for the quarter, representing a marginal rise from the prior-year period. While its non-GAAP net income increased 14.8% year-over-year to $57.90 million, its non-GAAP EPS remained unchanged at $0.20. As of March 31, 2022, the company had $545.30 million in cash and cash equivalents.
Analysts expect INFA’s revenue to grow by 10.7% year-over-year to $1.60 billion for its fiscal year 2022, ending Dec. 31, 2022. The company’s EPS is expected to grow at an 18.6% rate per annum over the next five years.
Over the past week, the stock has declined 0.8% in price to close yesterday’s trading session at $20.40.
INFA’s POWR Ratings reflect its solid prospects. 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 a B grade for Growth and Sentiment. In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for INFA’s Value, Quality Momentum, and Stability here.
INFA is ranked #1 of 28 stocks in the B-rated Software – SAAS industry.
The Descartes Systems Group Inc. (DSGX)
Based in Waterloo, Canada, DSGX provides cloud-based logistics and supply chain management business process solutions that focus on enhancing logistics-intensive businesses’ productivity, performance, and security worldwide. The company offers routing, mobile and telematics, transportation management and e-commerce enablement, customs and regulatory compliance, trade data, and global logistics network services.
On April 21, 2022, DSGX acquired Foxtrot Systems, a leading provider of route optimization tools focused on last-mile operations. Foxtrot’s advanced machine learning algorithms help customers reduce last-mile costs, improve customer service, and learn service factors that improve route efficiency and on-time performance. This acquisition will help DSGX improve its route planning and execution solutions offerings.
For its fiscal year 2022 fourth quarter, ended Jan. 31, 2022, DSGX’s revenues increased 20.3% year-over-year to $112.37 million. The company’s gross profit came in at $85.49 million, indicating a 21.6% year-over-year improvement. Its income from operations was $26.02 million, up 19% from the year-ago period. DSGX’s net income has increased 11.6% year-over-year to $19.19 million. Its EPS came in at $0.22, representing a 10% rise from the prior-year period. As of Jan. 31, 2022, the company had $213.40 million in cash.
Analysts expect the company’s EPS to improve 60.7% year-over-year to $0.98 for its fiscal year 2022, ending Jan. 31, 2023. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The $420.46 million consensus revenue estimate for the same fiscal year represents a 20.6% rise from the prior year. Its EPS is expected to grow at 26% per annum over the next five years.
Over the past week, the stock has declined 1.2% in price to close yesterday’s trading session at $59.35.
DSGX’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
It has a B grade for Stability, Sentiment, and Quality. Click here to see the additional ratings for DSGX’s Value, Growth, and Momentum.
DSGX is ranked #4 in the Software – SAAS industry.
MiX Telematics Limited (MIXT)
MIXT in Midrand, South Africa, offers fleet and mobile asset management solutions through a software-as-a-service delivery model to customers worldwide. The company’s products and services provide enterprise fleets, small fleets, and consumers with safety, efficiency, and security solutions.
On April 22, 2022, Martin Oliver Transport, a U.K.-based Road transport service provider, chose MIXT to provide in-depth data from its award-winning SaaS platform to optimize its fleet management capability. This partnership should prove beneficial for MIXT.
MIXT’s income from operations for its fiscal 2022 fourth quarter, ended March 31, 2022, increased 55.5% year-over-year to $5.91 million. MIXT’s adjusted net income came in at $3.49 million, up 54.2% from the prior-year period. Its adjusted income per ADS was $0.15, representing a 54.2% year-over-year improvement. The company had $33.74 million in cash and cash equivalents as of March 31, 2022.
The $0.41 consensus EPS estimate for its fiscal year 2023, ending March 31, 2023, represents a 1.7% year-over-year improvement. Analysts expect its revenue to grow 3.3% year-over-year to $148.07 million for the same fiscal year. The company’s EPS is expected to grow at a 1.8% rate per annum over the next five years.
Over the past week, MIXT stock has gained 3% in price to close yesterday’s session at $10.36.
MIXT’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 an A grade for Value and a B grade for Sentiment. Click here to see the additional ratings for MIXT (Sentiment, Momentum, Growth, and Stability).
The stock is ranked #3 in the Software – SAAS industry.
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INFA shares were trading at $20.26 per share on Wednesday morning, down $0.14 (-0.69%). Year-to-date, INFA has declined -45.21%, versus a -13.27% 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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