Given the growing business need for enhanced capabilities and efficiency, the adoption of new technologies like SaaS is rising significantly. Businesses are strongly investing and leveraging SaaS platforms for enhanced automation, personalized experiences, and predictive insights, resulting in lucrative growth opportunities for the market.

Given the industry’s tailwinds, quality SaaS stocks Consensus Cloud Solutions, Inc. (CCSI), Vimeo, Inc. (VMEO), and Kaltura, Inc. (KLTR) could be ideal portfolio additions in a booming tech market.

Advanced technologies continuously showcase their ability to transform business operations and boost efficiency, resulting in companies’ increased technology use and adoption of the latest software and innovations to enhance their capabilities and maintain a competitive edge.

In such market dynamics, Software-as-a-service (SAAS) has emerged as one of the most promising solutions, offering accessibility, functionality, and versatility in a dynamic business environment. Amid the growing use of public cloud services, the rise of remote work, advancements in AI and machine learning, and the preference for cloud-based solutions, the industry is on the rise.

Further, IMARC group expects the global software as a service (SaaS) market to hit around $1.17 trillion by 2033, exhibiting growth at a CAGR of 14.8%. The market is driven by the growing reliance on SaaS solutions across diverse industries, rising demand for payment gateways and inventory management, and increasing adoption of customer relationship management (CRM) solutions.

Given these encouraging trends, let’s look at the fundamentals of the three Software – SAAS stocks, beginning with the third choice.

Stock #3: Consensus Cloud Solutions, Inc. (CCSI)

CCSI globally provides information delivery services with a software-as-a-service platform. It provides eFax Corporate and Unite. It also offers jsign, an electronic and digital signature solution; Conductor, an interface engine and interoperability platform; Clarity to transform unstructured documents; and eFax, an online faxing solution under the MyFax, MetroFax, Sfax, and SRfax brands.

On September 17, 2024, CCSI entered a strategic partnership with Olah Healthcare Technology, a legacy data archiving services and solutions leader. The strategic collaboration aims at modernizing data exchange and access to patient health information. The companies will work towards simplifying the transition from outdated legacy systems to modern, cloud-based technology.

The strategic partnership will strengthen CCSI’s market position and offer both organizations expanded market reach, heightened brand visibility, and new revenue opportunities.

For the third quarter that ended September 30, 2024, CCSI reported revenues of $87.75 million, and its gross profit stood at $70.09 million for the quarter. Also, the company’s adjusted net income came in at $25.48 million or $1.31 per share for the quarter, respectively.

Furthermore, the company’s adjusted EBITDA and free cash flow were $46.92 million and $33.59 million for the period.

Analysts expect CCSI’s EPS for the fourth quarter (ended December 2024) to increase 6.1% year-over-year to $1.18. Also, the company’s EPS for the fiscal year 2024 is expected to grow 7.9% year-over-year to $5.49. Moreover, CCSI has surpassed the consensus revenue and EPS estimates in three of the four trailing quarters.

CCSI’s stock has gained 41% over the past six months and 32.4% over the past year to close the last trading session at $25.02.

CCSI’s sound outlook is reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

The stock has an A grade for Value and a B grade for Quality. Within the A-rated Software – SAAS industry, CCSI is ranked #6 among 18 stocks.

Click here to access additional CCSI ratings for Growth, Stability, Sentiment, and Momentum.

Stock #2: Vimeo, Inc. (VMEO)

VMEO provides video software solutions internationally. It offers video tools through a software-as-a-service model, enabling users to create, collaborate, and communicate with video on a single platform. The company also provides over-the-top OTT streaming and monetization services, AI-driven video creation and editing tools, and interactive and shoppable video tools.

On October 23, 2024, VMEO launched its ground-breaking app for Apple Vision Pro, the New Apple Vision Pro app. The immersive app brings viewers into the content and empowers Vision Pro users to view, upload, and share their spatial videos with others to enjoy. The app can be utilized for personal and professional uses, delivering an innovative way to tell powerful stories.

Also, on July 31, 2024, VMEO introduced its AI-powered video translation solution. The technology leverages generative AI to translate video, audio, and captions into dozens of languages and can dramatically reduce the time and cost associated with traditional translation offerings.

For the third quarter that ended September 30, 2024, VMEO’s revenue amounted to $104.56 million, and its gross profit was $82.86 million. The company’s operating income of $7.36 million indicates growth of 25.6% from the previous year’s quarter. Also, its adjusted EBITDA increased 25.8% year-over-year to $16.10 million.

In addition, the company’s net earnings came in at $9.28 million, up 9.7% year-over-year, while its EPS was $0.05 for the quarter.

For the fourth quarter of 2024, the company expects its revenue to be around $100 million, and its operating income is projected at $2 million. Also, VMEO’s adjusted EBITDA is expected to be $10 million, depending on investments.

Street expects VMEO’s revenue for the second quarter (ending June 2025) to increase marginally year-over-year to $104.47 million. For the fiscal year (ending December 2025), the company’s revenue is expected to improve 2.1% year-over-year to $423.06 million. Also, the company has surpassed the consensus EPS and revenue estimates in all of the trailing four quarters.

Shares of VMEO have surged 75% over the past six months and 72.6% over the past year to close the last trading session at $6.37.

VMEO’s POWR Ratings reflect its strong fundamentals. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.

VMEO has an A grade for Quality. The stock also has a B grade for Value and Sentiment. It is ranked #3 out of 18 stocks in the same industry.

In addition to the POWR Ratings we’ve stated above, we also have VMEO ratings for Growth, Momentum, and Stability. Get all VMEO ratings here.

Stock #1: Kaltura, Inc. (KLTR)

KLTR provides various software-as-a-service (SaaS) products and solutions and a platform-as-a-service (PaaS) internationally. The company functions through two segments: Enterprise, Education, and Technology (EE&T) and Media and Telecom (M&T).

On December 3, 2024, KLTR announced the beta launch of Kaltura Work Genie, an AI-powered agent to deliver hyper-personalized, immersive digital experiences for enterprise customers and employees. The solution resolves the challenges faced in delivering timely, relevant, and impactful information. It transforms endless searches into instant discovery of engaging, customized content.

Also, on November 19, 2024, KLTR launched Kaltura Class Genie, a new AI-powered agent that creates hyper-personalized learning experiences for students. Class Genie creates individualized immersive learning resources tailored to students’ personal needs, depending on their preferences, engagement patterns, and past interactions.

During the third quarter that ended September 30, 2024, KLTR’s total revenue increased 1.7% year-over-year to $44.29 million. Its non-GAAP gross profit grew 6.4% from the year-ago value to $29.91 million. Also, the company’s non-GAAP operating income was $1.29 million for the quarter.

Further, the company’s non-GAAP net income attributable to common stockholders was $2.15 million, or $0.01 per share for the period, respectively.

According to the financial outlook, KLTR projects its Subscription Revenue to grow by 2%-4% year-over-year to between $41.80 million and $42.50 million. The company’s total revenue is expected to be $44 million – $44.70 million. Its adjusted EBITDA is set in the range of $0.5 million to $1.5 million.

For the full year 2024, KLTR expects Subscription Revenue growth of 2% year-over-year to $166.1 million – $166.8 million, and its total revenue is poised to grow by 1% – 2% from the prior year to $177.1 million to $177.8 million. And its adjusted EBITDA is projected to range from $5.1 million to $6.1 million.

Analysts expect KLTR’s revenue for the fiscal year 2024 to grow 1.3% from the prior year to $177.47 million. The company’s revenue for the first quarter (ending March 2025) is projected to increase marginally year-over-year to $44.92 million. Also, the company topped the consensus revenue estimates in each of the trailing four quarters.

Over the past six months, the stock has gained 91.7% and 34.5% over the past year to close the last trading session at $2.30.

KLTR’s POWR Ratings reflect its robust prospects. The stock has an overall grade of A, translating to a Strong Buy in our proprietary rating system.

KLTR has a B grade for Quality, Sentiment, Value, Stability, and Growth. The stock is ranked first among the 18 stocks within the A-rated Software – SAAS industry.

To see all the ratings of KLTR, click here.

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VMEO shares were trading at $6.25 per share on Thursday afternoon, down $0.12 (-1.88%). Year-to-date, VMEO has declined -2.34%, versus a 0.88% rise in the benchmark S&P 500 index during the same period.

About the Author: Rjkumari Saxena

Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions. More...

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