The COVID-19 pandemic-led restrictions helped the cloud computing industry’s growth accelerate. According to a Techjury report, 61% of businesses migrated their workloads to the cloud in 2020.
Companies are expected to continue using cloud platforms given the advantage of accessing data from anywhere on any device and reduced spending on storage. Moreover, a surge in internet penetration, consistent innovation in artificial intelligence (AI), big data, and 5G are expected to drive the industry’s growth. According to a Research and Markets report, the global cloud computing services market is expected to reach $937.5 billion by 2027.
Amid this backdrop, it could be wise to bet on established cloud computing stocks Workday, Inc. (WDAY), Dropbox, Inc. (DBX), Mimecast Limited (MIME), and Cornerstone OnDemand, Inc. (CSOD). Their broad portfolio of products and services and consistent innovations should help them capitalize on the industry tailwinds.
Workday, Inc. (WDAY)
WDAY provides enterprise cloud applications to help its customers to manage critical business functions and optimize their financial and human resources. The company’s offerings include financial management applications, cloud spend management solutions, and Workday applications for planning.
On September 29, WDAY announced that Google LLC has subscribed to WDAY’s additional products to support its global workforce, including Workday Adaptive Planning, Workday Extend, Workday Prism Analytics, and Workday Strategic Sourcing. This represents the increasing demand for the company’s solutions.
WDAY’s subscription services increased 19.5% year-over-year to $1.11 billion for the fiscal second quarter ended July 31, 2021. Its total revenues increased 18.7% from last year to $1.26 billion. Its net income came in at $105.74 million, compared to a loss of $28.02 million in the year-ago period. Also, its EPS came in at $0.41, compared to a loss of $0.12 in the previous period.
For fiscal 2022, analysts expect WDAY’s revenue to be $5.11 billion, representing an 18.2% year-over-year rise. In addition, the company’s EPS is expected to increase 24.9% year-over-year to $3.66 in fiscal 2022. Also, it surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 13% to close yesterday’s trading session at $249.51.
WDAY’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our POWR Rating system. The POWR Ratings assess stocks by 118 different factors, each with its real-time weighing.
Also, the stock has an A grade for Growth and Sentiment, and a B grade for Quality. Within the Software-Application industry, it is ranked #24 of 150 stocks. Click here to see the additional POWR Ratings for Stability, Value, and Momentum for WDAY.
Dropbox, Inc. (DBX)
One of the leading global collaboration platform providers, DBX provides online file storage and sharing services. In addition, its platform allows individuals, teams, and organizations to collaborate and sign up for free through its website or app and upgrade to a paid subscription plan for premium features.
DBX acquired DocSend in March 2021, a secure document sharing and analytics company with more than 17,000 customers. This acquisition is expected to help the company expand its product and services portfolio and help customers across industries manage end-to-end document workflows.
DBX’s total revenues increased 13.5% year-over-year to $530.60 million in the second quarter ended June 30, 2021. Its gross profit came in at $423.50 million, representing a 16.1% year-over-year rise. Its non-GAAP net income increased 72.2% year-over-year to $160.50 million, while its non-GAAP EPS came in at $0.40, representing an 81.8% year-over-year rise.
Analysts expect DBX’s revenue and EPS to grow 11.8% and 55.9% year-over-year to $2.14 billion and $1.45, respectively, in fiscal 2021. In addition, it surpassed the consensus EPS estimates in all of the trailing four quarters. Over the past year, the stock has gained 52.9% to close yesterday’s trading session at $29.24.
DBX’s strong fundamentals are reflected in its POWR ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.
In addition, it has an A grade for Quality, and a grade B for Growth. It is ranked #5 of 72 stocks in the Technology – Services industry. Click here to see the additional POWR Ratings for DBX (Value, Momentum, Stability, and Sentiment).
Mimecast Limited (MIME)
Headquartered in London, the United Kingdom, MIME provides cloud security and risk management services for corporate information and email. The company’s services include Mimecast Email Security solution, Mimecast Enterprise Information Archiving, and Mimecast Business Continuity. In addition, its Mimecast Email Security with Targeted Threat Protection is a set of cloud services that protect against email-borne threats.
On August 17, MIME announced its strategic API integration with Humio to deliver email-based threat intelligence with advanced detection, investigation, and threat hunting. Jules Martin, vice president, ecosystem & alliances at MIME, said, “Our integration with Humio helps provide organizations increased visibility with live searches and real time dashboards, empowering threat hunting teams to find a potentially malicious activity before it lands in an inbox.”
For the fiscal first quarter ended June 30, 2021, MIME’s revenue increased 23.8% year-over-year to $142.55 million. The company’s gross profit came in at $109 million, up 25.7% year-over-year. Its net income increased 221% year-over-year to $10.07 million. Also, its EPS came in at $0.15, up 200% year-over-year.
MIME’s revenue is expected to come in at $665.64 million in fiscal 2023, representing a 14.4% year-over-year rise. In addition, the company’s EPS is expected to increase 16.7% year-over-year to $1.47 in the next year. Also, it surpassed Street EPS estimates in all of the trailing four quarters. Over the past year, the stock has gained 39.4% to close yesterday’s trading session at $64.10.
It’s no surprise that MIME has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has a B grade for Growth and Quality.
Cornerstone OnDemand, Inc. (CSOD)
Cloud computing company CSOD helps organizations recruit, train, and manage their people with the help of software-as-a-service (SaaS) solutions. Its software and services are used by more than 42 million people across 192 countries. Also, it serves business services, financial services, healthcare, pharmaceuticals, insurance, manufacturing, retail, and technology industries.
CSOD’s total revenue increased 16.3% year-over-year to $214.34 million for the fiscal second quarter ended June 30, 2021. Its gross profit increased 21.5% from last year to $153.57 million. While its non-GAAP operating income came in at $68.56 million, up 71.9% year-over-year, its non-GAAP net income increased 90.9% to $51.91 million. Also, its EPS came in at $0.73, up 82.5% year-over-year.
For fiscal 2021, analysts expect CSOD’s revenue to be $863.26 million, representing a 16.5% year-over-year rise. In addition, the company’s EPS is expected to increase 42.1% year-over-year to $2.53 in fiscal 2021. Also, it surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 63.2% to close yesterday’s trading session at $57.25.
CSOD’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our POWR Rating system.
Also, the stock has a B grade for Growth and Value. Within the Software-Application industry, it is ranked #25 of 150 stocks. Click here to see the additional POWR Ratings for Stability, Sentiment, Quality, and Momentum for CSOD.
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WDAY shares were trading at $249.89 per share on Thursday afternoon, up $0.38 (+0.15%). Year-to-date, WDAY has gained 4.29%, versus a 15.90% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...
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