Best Software as a Service Investments in 2019
These Companies Are Making Life Easier for Corporate America
The explosion of new technologies over the last 30 years has transformed the investment landscape, with most stock portfolios now containing heavy doses of tech stocks.
Many of these companies have taken advantage of cloud computing technologies to launch popular products and services that fall into a category known as “software as a service.”
What Are Software as a Service (SaaS) Firms?
Software as a Service (SaaS) firms include some of the fastest-growing companies, generating billions of dollars in revenue from a wide range of web-based tools that corporate America pays for handsomely in subscriptions.
For the most part, SaaS companies sell or license software that is centrally hosted and used to solve a wide range of problems, from managing sales leads to processing payroll, accounting, and even inter-office communication. If you work in any kind of corporate environment, you’ve probably encountered an application produced by one of these SaaS providers.
Software as a service is considered part of the broader business of cloud computing, which includes Infrastructure as a Service, Platform as a Service, and other similar products. According to the research company Gartner, sales of software as a service were expected to reach $85.1 billion in 2019, and $113 billion by 2021.
Six SaaS Companies for Your Portfolio in 2019
There are many public companies involved in this space. The list includes major tech firms like Microsoft, Amazon, and Google, though they generate more revenue from other sources.
Consider adding these six companies to your stock portfolio in 2019.
1. Oracle [NYSE: ORCL]
Oracle is a pioneer in SaaS and has a robust suite of applications addressing workforce management, financials, performance tracking, customer service and marketing, and supply chain management. As of March 2019, shares were near a 52-week high and had risen about 15% in the year. The company's cloud services bring in more than $6.6 billion in quarterly revenue.
2. Adobe [NASDAQ: ADBE]
If you’ve ever worked with Photoshop, you’ve worked with Adobe. The Creative Cloud creator said it had record revenue of $2.46 billion in the quarter ending December, 2018. The company said it had 20% year-over-year growth of its subscription revenue, and that does not even include the impact of acquiring the Marketo and Magneto software platforms. Shares of Adobe rose 18% in the first three months of 2019.
3. Salesforce [NYSE: CRM]
It is the behemoth in customer relationship management. Salesforce’s software helps companies track sales leads, find new customers, and maintain a database of contacts. In its quarter ending January, 2019, the company reported $3.6 billion in revenue, up 26% from the same period a year ago. The bulk of this was from its subscriptions and related support. Shares rose about 17% in the first three months of 2019.
4. Square [NYSE: SQ]
You’ve probably seen Square in action when you’ve bought something from an independent retailer or food truck. Square is known for its credit card processing app, but has a large cloud-based software platform that allows companies to track sales and manage every area of their business. Square is one of the hottest tech stock right now, with shares up 29% in 2018, and 50% in the last 12 months. It reported revenues of $932.5 million in the quarter ending in December of 2018, up 51% from the same period a year ago.
5. Workday [NASDAQ: WDAY]
Workday operates a subscription cloud-based system for managing human resources, finances, and planning. If you’ve ever applied for a job or accessed paystubs or company policies online, you’ve probably interacted with Workday.
Workday was founded in 2005 but went public in 2012 with one of the most successful launches ever in the U.S tech sector. Its revenues rose 35.3% in the quarter ending in January, hitting $788.6 million. Shares are up 20% in 2019, and more than 51% in the last 12 months.
6. Intuit [NASDAQ: INTU]
You’ve heard of Quicken. You’re probably familiar with TurboTax and Mint.com. This provider of cloud-based financial software has seen consistent, steady growth in revenues and profits—to the delight of shareholders.
The Mountain View, California company reported $1.5 billion in revenue in the quarter ending in January 2019, up 12% from a year ago. The company said its small business and self-employed subscribers in the U.S. rose 32% to 2.9 million during the quarter.
Intuit’s shares rose 31% during the first three months of 2019, and are up 47% in the last year.