With emerging developments and innovations, the tech sector is transforming every day. Tech stocks may belong to emerging companies in fields such as Artificial Intelligence (AI), cloud computing, or software development, which are poised for rapid expansion.

Therefore, investors looking for a unique opportunity to gain exposure to high-growth industries at a relatively low entry cost might consider these three tech stocks, Vimeo, Inc. (VMEO), PubMatic, Inc. (PUBM), and Eventbrite, Inc. (EB) for a potential breakout.

Firms focusing on SaaS platforms, cybersecurity, or specialized hardware have shown resilience and adaptability, positioning themselves for future success. The SaaS model offers agility and cost-effectiveness for companies, making it an incredibly reliable option for numerous business models and industries, including construction. Gartner predicts worldwide spending on public cloud services will reach $723 billion in 2025.

As advancements in 5G, IoT, and renewable technologies gain momentum, the tech sector remains a critical driver of both innovation and economic progress. This evolution not only fuels demand for cutting-edge solutions but also creates opportunities for smaller, affordable tech firms to carve out their niche.

Furthermore, the global information technology (IT) market is projected to be $26.93 trillion by 2032, growing at a CAGR of 11%.

With that in mind, let’s delve into the fundamentals of the above-mentioned three tech picks.

Vimeo, Inc. (VMEO)

VMEO operates a global video experience platform, providing a full breadth of video tools through a software-as-a-service (SaaS) model, which enables its users to create, collaborate, and communicate with video on a single platform.

On October 23, VMEO announced the launch of its app for Apple Vision Pro, which brings viewers into the content and empowers Vision Pro users to view, upload, and share their spatial videos with others. This launch is a significant milestone for VMEO’s mission of storytelling and to push the boundaries of video experiences. 

In terms of forward EV/Sales, VMEO is trading at 1.81x, which is 8.8% lower than the industry average of 1.99x.

VMEO’s revenue for the nine-month period (ended September 30, 2024) increased marginally year-over-year to $313.85 million. The company reported an operating income of $17.42 million, indicating a 133% growth from the prior year period. VMEO’s net earnings came in at $25.48 million, and its earnings per share stood at $0.15, up 86.8% and 87.5% year-over-year, respectively.

Analysts expect VMEO’s EPS for the fiscal year (ended December 2024) to grow 40.4% year-over-year to $0.18, and its revenue is expected to be $414.43 million. 

Over the past six months, the stock has surged 74.9%, closing the last trading session at $6.42.

VMEO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

VMEO has an A grade for Quality and a B for Value and Sentiment. It is ranked #3 out of 18 stocks in the A-rated Software – SAAS industry. Click here to see the additional ratings for VMEO (Growth, Momentum, and Stability).

PubMatic, Inc. (PUBM)

PUBM is a technology company that provides a cloud infrastructure platform that enables real-time programmatic advertising transactions for digital content creators, advertisers, agencies, agency trading desks, and demand side platforms worldwide.

On January 8, PUBM announced that its innovative media activation platform, Activate, achieves rapid, significant adoption in the industry. With nearly 6x growth in customer count and nearly 5x in campaign count year-over-year in 2024, Activate has been able to deliver superior supply path optimization (SPO) along with its curated premium data and inventory and unmatched performance.

On December 12, PUBM announced the expansion of its partnership with GroupM, WPP’s media investment group, to enhance GroupM Premium Marketplace (GPM), a unified programmatic market aimed at increasing media buying transparency and efficiency, in the Latin American market region. This partnership will launch in tandem with PUBM’s Activate product, bringing SPO for brands and advertisers to the region.

In terms of forward EV/EBITDA, PUBM is trading at 6.64x, 17.3% lower than the industry average of 8.03x.

For the fiscal 2024 third quarter that ended on September 30, 2024, PUBM’s revenue increased 12.7% year-over-year to $71.79 million. The company’s gross profit came in at $46.28 million, reflecting an increase of 23.1% from the prior year’s quarter. Its adjusted EBITDA grew marginally from the same period last year to $18.46 million. In addition, its non-GAAP net income amounted to $6.57 million, and its non-GAAP EPS stood at $0.12.

Street expects PUBM’s revenue for the fiscal year (ended December 2024) to increase 10.2% year-over-year to $294.19 million. Moreover, its EPS estimate of $0.21 for the same period indicates a 29.4% year-over-year growth.

PUBM shares have surged marginally year-to-date to close the last trading session at $14.74.

PUBM’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

It also has a B grade for Sentiment and Quality. Within the B-rated Software – Application industry, it is ranked #44 out of 125 stocks. Click here to see PUBM’s ratings for Growth, Value, Momentum, and Stability.

Eventbrite, Inc. (EB)

EB operates a two-sided marketplace that provides self-service ticketing and marketing tools for event creators internationally. Its platform integrates components needed to plan, promote, and produce live events that allow creators to reduce friction and costs, enhance reach, and drive ticket sales.

On October 28, EB launched a free timed-entry tool that empowers organizers to easily set up and sell multiple daily time slots for their events. This fully customizable solution brings more flexibility and is an enhanced opportunity for tours, attractions, excursions, and classes, where attendees can easily book tickets for their preferred time slot.

In terms of forward EV/Sales, EB is trading at 0.07x, 96.6% lower than the industry average of 1.99x. Likewise, the stock’s forward EV/EBITDA and Price/Sales multiples of 0.62 and 1.03 are 92.2% and 20.7% lower than their respective industry averages of 8.03 and 1.30.

During the nine-month period of 2024, which ended on September 30, EB’s net revenue increased 4.3% year-over-year to $248.60 million. Its gross profit amounted to $174.42 million, up 8% year-over-year. Also, the company’s adjusted EBITDA for the period rose 44% from the year-ago value to $28.59 million.

For the fiscal year (ending December 2025), Street expects EB’s revenue to increase 4.2% year-over-year to $338.20 million. Meanwhile, its EPS for the same period is expected to be $0.04.

The stock has gained 26.4% over the past three months to close the last trading session at $3.45.

It’s no surprise that EB has an overall rating of B, equating to a Buy in our POWR Ratings system. It has an A grade for Value and a B for Quality. Out of 24 stocks in the B-rated Internet – Services industry, EB is ranked #9.

Beyond what is stated above, we’ve also rated EB for Growth, Momentum, Stability, and Sentiment. Get all EB ratings here.

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VMEO shares were trading at $6.13 per share on Friday afternoon, down $0.29 (-4.52%). Year-to-date, VMEO has declined -4.22%, versus a -0.89% rise in the benchmark S&P 500 index during the same period.

About the Author: ShreyaRathi

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