Software-as-a-service or SaaS leads in cloud computing for its versatility, scalability, cost-effectiveness, seamless integration, global accessibility, and customer support. Modern enterprises rely on SaaS for efficiency and innovation, benefiting from its adaptability, collaborative tools, and robust security.
Given the ongoing digital transformation, investors may want to closely monitor strong SaaS stocks Smartsheet Inc. (SMAR), CCC Intelligent Solutions Holdings Inc. (CCCS), and DocuSign, Inc. (DOCU). These companies seem well-positioned to capitalize on the expanding opportunities in the sector.
Cloud-based software services are now dominating over traditional software applications. Enterprises are investing in digital transformation, adopting trends like Vertical SaaS, DaaS, and iPaaS to enhance system connectivity, manage data effectively, and meet rising industry needs.
Hence, Gartner predicts SaaS spending will grow by 20% this year, reaching $247.20 billion. Supporting this growth, the General Services Administration's policy change enables governments to more easily adopt software through upfront payments, strengthening market stability and attracting greater investment opportunities in the expanding SaaS landscape.
Looking forward, according to a report published by Research and Markets, the global SaaS market is projected to grow at a CAGR of 6.2%, reaching $325.84 billion by 2028, reflecting its dynamic growth and innovation potential.
Given the SaaS industry’s positive trends, let’s dive deeper into the fundamentals of three growth-heavy Software – SAAS stocks starting with #3.
Stock #3: Smartsheet Inc. (SMAR)
SMAR provides a work management platform for organizations, allowing them to plan, capture, manage, automate, and report on work at scale. The cloud-based software is delivered globally through a subscription model, offering products like Smartsheet, WorkApps, and Premium Apps and Connectors for business work management needs.
On July 9, SMAR introduced Amazon Q Business, an AI-powered assistant aimed at enhancing knowledge management and boosting productivity within its cloud operations. The implementation underscores SMAR's commitment to leveraging cutting-edge technology to improve employee efficiency and elevate customer service standards.
On May 14, SMAR unveiled new AI and resource management features, offering businesses actionable insights and improved operational visibility. In the rapidly growing AI sector, SMAR continues to solidify its market presence by integrating advanced technologies that support business growth and innovation across industries.
During the fiscal 2025 second quarter that ended July 31, 2024, SMAR’s total revenue increased 17.3% year-over-year to $276.41 million. Its non-GAAP operating income rose 135.7% from the year-ago value to $45.30 million.
Moreover, the company’s non-GAAP net income and non-GAAP net income per share grew 180% and 175% from the prior year’s quarter to $61.64 million and $0.44, respectively.
Analysts expect SMAR’s revenue and EPS for the fiscal 2025 third quarter (ending October 2024) to grow 15.4% and 90.3% year-over-year to $283.85 million and $0.30, respectively. Also, the company has topped the consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.
Shares of SMAR have gained 16.4% over the past three months and 21.1% over the past six months to close the last trading session at $50.56.
SMAR’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. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
SMAR has an A grade for Growth and Sentiment and a B for Quality. It is ranked #5 out of 18 stocks in the A-rated Software – SAAS industry.
To see SMAR’s Value, Momentum, and Stability ratings, click here.
Stock #2: CCC Intelligent Solutions Holdings Inc. (CCCS)
CCCS provides software-as-a-service (SaaS) platform for the property and casualty (P&C) insurance economy. The company’s cloud-based software serves as a service platform connecting trading partners, facilitating commerce, and enabling digital workflow across the platform through artificial intelligence.
On September 4, CCCS launched CCC® Payroll, a solution to streamline payroll management for collision repair shops. By integrating this into the CCC ONE® Platform, CCCS enhances operational efficiency for businesses. The innovation could strengthen CCCS’ market position, driving customer adoption and fostering growth.
On July 30, CCCS introduced CCC® Intelligent Reinspection, which uses AI to streamline auto insurers’ repair estimate reviews. By automating and simplifying workflows, CCCS is tapping into the AI revolution, helping secure a larger market share and paving the way for further expansion and technological advancement.
CCCS’ revenues for the fiscal 2024 second quarter that ended June 30, 2024, increased 9.9% year-over-year to $232.62 million. It reported an adjusted gross profit of $182.08 million, indicating a 12.4% growth from the prior year quarter with an adjusted gross profit margin of 78%.
In addition, the company’s adjusted net income came in at $56.19 million or $0.09 per share, up 17.4% and 28.6% year-over-year, respectively. Also, its adjusted EBITDA increased 18.4% year-over-year, amounting to $95.79 million.
The consensus revenue and EPS estimates of $237.36 million and $0.09 for the fiscal third quarter (ending September 2024) represent a 7.3% and 2% year-over-year increase, respectively. Moreover, CCCS has an impressive surprise history; it surpassed the expected revenue and EPS estimates in each of the four trailing quarters.
The stock has gained 5.8% over the past month to close the last trading session at $10.75.
CCCS’ POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.
CCCS has a B grade for Growth, Stability, and Sentiment. It is ranked #3 out of 18 stocks in the Software – SAAS industry.
Click here to see the other ratings of CCCS for Value, Momentum, and Quality.
Stock #1: DocuSign, Inc. (DOCU)
DOCU offers electronic signature products, allowing agreements to be signed globally from various devices. The company's products include eSignature, Contract Lifecycle Management, Gen for Salesforce, Identify and Monitor, and Document Generation.
On June 4, DOCU announced a new Connector for SAP Ariba solutions, automating workflows between DOCU's CLM and SAP Ariba to streamline the source-to-pay process. Available globally in September, this innovation solidifies DOCU's leadership in e-signature technology and strengthens its market presence.
On May 31, DOCU completed its acquisition of Lexion, an AI-powered agreement management company. The strategic move would enhance DOCU's Intelligent Agreement Management (IAM) capabilities, allowing DOCU to offer advanced AI-assisted solutions and further solidify its position in the rapidly growing IAM space.
DOCU’s total revenues for the fiscal 2025 second quarter that ended July 31, 2024, rose 7% year-over-year to $736.03 million. The company’s non-GAAP income from operations stood at $236.16 million, up 39.6% from the previous year’s quarter.
Additionally, DOCU’s non-GAAP net income came in at $200.99 million and $0.97 per share, representing increases of 34.3% and 34.7% year-over-year, respectively.
Street expects DOCU’s revenue and EPS for the fiscal 2025 third quarter (ending October 2024) to increase 6.4% and 10.2% year-over-year to $745.31 million and $0.87, respectively. Additionally, the company surpassed the consensus EPS estimates in each of the trailing four quarters, which is impressive.
Shares of DOCU have gained 10.1% over the past three months and 21.8% over the past year to close the last trading session at $56.49.
DOCU’s POWR Ratings reflect strong prospects. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
DOCU has an A grade for Quality and a B for Value and Growth. It has topped the Software – SaaS industry.
Beyond what we stated above, we have also given DOCU grades for Momentum, Stability, and Sentiment. Get all the DOCU’s ratings here.
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DOCU shares rose $1.29 (+2.28%) in premarket trading Friday. Year-to-date, DOCU has declined -4.98%, versus a 18.37% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
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