3 In-Demand Software Stocks Worth Considering Ahead Of Q4 Earnings
Investing.com | Feb 05, 2020 12:37
Most high-profile, U.S. mega cap tech stocks have already reported their latest quarterly results. Some of the most followed, like Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Amazon.com (NASDAQ:AMZN) beat expectations.
In stark contrast, Google parent Alphabet (NASDAQ:GOOG) and Facebook (NASDAQ:FB) released less than stellar results, sending their respective stocks lower.
While most of the media and investor focus centered on these big names, there are other stocks that warrant attention ahead of their earnings releases.
Here are 3 companies from the software as a service (SaaS) sector, expected to see continued revenue growth thanks to robust demand for their products and services:
Shares of Zendesk (NYSE:ZEN) have had a strong start to the year, as investors grow increasingly bullish on the customer relationship management solutions provider.
The company's flagship product, Zendesk Support, is a system for tracking, prioritizing and solving customer support tickets across various channels. Another popular offering is Zendesk Chat, a live chat software that connects with customers on websites, applications and mobile devices.
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The stock, which has rallied roughly 17% since Jan. 1 compared to the NASDAQ’s 5.5% gain, closed at a six-month high of $89.52 on Tuesday with a market cap of $10 billion.
The San Francisco-based customer service software maker’s Q4 results are expected to have benefited from booming demand and adoption of its Zendesk Sunshine and Zendesk Suite solutions services.
Consensus calls for earnings per share of $0.10 for the fourth quarter. Revenue is forecast to surge 32% from the same period a year earlier to $227.58 million.
Beyond the top-and bottom-line figures, Zendesk’s update regarding its client additions will be closely watched to see whether it can maintain its torrid pace of growth. At the end of the third quarter, paid customer accounts were roughly 153,700, up 4,700 YoY.
One of the major winners of 2019, Shopify (NYSE:SHOP), has seen its stock soar 22% already this year. Shares of the Canadian e-commerce software platform, which helps merchants set up online retail shops and manage their brands, ended at an all-time high of $485.46 yesterday and a market cap of $56 billion.
Consensus calls for Shopify's earnings per share are $0.23 for the fourth quarter. Revenue is forecast to jump 40% from the same period a year earlier to $481.93 million.
Revenue growth in Shopify's merchant solutions and subscription solutions segments will be closely examined after they increased by 50% and 37% YoY respectively in Q3. Benefiting from the rising popularity of e-commerce, Shopify has enjoyed staggering expansion at its payments network.
Other developments in focus include details regarding the e-commerce company's fulfillment network, which could help its merchants compete more effectively against Amazon.
Trade Desk (NASDAQ:TTD), has seen shares pick up where they left off last year, climbing 17% so far in 2020.
Investors remain bullish on the digital ad-buying specialist, which operates a self-service software platform where customers can buy and manage data-driven digital advertising campaigns.
The stock has benefited from a burgeoning wave in digital ad-purchasing, closing at a record high of $303.13 last night with a market cap of $13.7 billion.
The Ventura, California-based company’s fourth-quarter earnings per share are expected to rise 7% from the year-ago period to $1.17, while revenue is forecast to jump 33% YoY to $213.42 million.
Investors will be keen to see if the online advertising provider continues to enjoy explosive growth in its connected TV and audio markets, which surged 145% and 160% YoY respectively in Q3. Fourth quarter performance of both segments is expected to see a boost from new sources for revenue growth as more streaming platforms enter the space.
Other areas of interest will be management comments about online advertising opportunities presented by the Olympic Games this summer and the U.S. presidential election in November.
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