The software industry has been growing rapidly in recent years. And business expansion initiatives and rapid enterprise software and services deployment across organizations to improve decision-making, flexibility, productivity, and profitability are expected to continue to fuel the industry’s growth.
Furthermore, the ongoing digital transformation and increasing use of big data analytics to make data-driven decisions and improve business outcomes are increasing the use of advanced software solutions, while consistent innovation by software companies is expected to help sustain the industry’s growth momentum. Software market revenue is expected to grow at a 5.8% CAGR to $806.20 billion by 2027.
Given the industry’s promising outlook, Wall Street analysts expect software stocks monday.com Ltd. (MNDY), Confluent, Inc. (CFLT), AppLovin Corporation (APP), and WalkMe Ltd. (WKME) to rally more than 80% in price in the near term.
Click here to check out our Software Industry Report for 2022
monday.com Ltd. (MNDY)
Headquartered in Tel Aviv-Yafo, Israel, MNDY develops software applications globally. It provides Work OS, a cloud-based open platform that democratizes the power of software and helps organizations build software applications and work management tools.
On March 2, 2022, MNDY and KPMG International, one of the big four accounting firms, announced a strategic alliance to build customized solutions and apps that will empower enterprises to boost digital transformation and deliver strategic operating models with agility and enhanced productivity. KPMG’s extensive industry knowledge and expertise are expected to prove beneficial to the company and aid the expansion of its enterprise network globally.
MNDY’s revenue increased 90.5% year-over-year to $95.55 million in its fiscal fourth quarter, ended Dec. 31, 2021. Its gross profit improved 92.8% year-over-year to $83.78 million. Its net cash provided by operating activities increased 223.4% from its year-ago value to $13.52 million, while its total cash, cash equivalents, and restricted cash balance was $886.81 million, up 572.8% year over year.
Analysts expect MNDY’s revenue for its fiscal quarter ending June 30, 2022, to come in at $110.77 million, indicating a56.9% year-over-year increase. Also, the company’s revenue is expected to grow 49% year-over-year to $123.66 million in the quarter ending Sept. 30, 2022.
MNDY’s shares have gained 17.9% in price year-to-date to close the last trading session at $137.17.
Among the eight Wall Street analysts that have rated MNDY, seven rated it Buy, and one rated it Hold. The 12-month median price target of $250.00 indicates an 82.3% potential upside. The price targets range from a low of $170.00 to a high of $390.00.
Confluent, Inc. (CFLT)
CFLT in Mountain View, Calif., operates a data streaming platform in the United States and internationally. It is engaged in designing data infrastructure to connect the applications, systems, and data layers around a real-time central nervous system.
On April 5, 2022, CFLT announced its partnership with Microsoft Corp. (MSFT) to accelerate data infrastructure modernization in the cloud. This strategic partnership aims to help organizations streamline and realize the power of cloud-native data and speed up the real-time development of modern applications.
Earlier, the company announced a five-year strategic collaboration with Amazon Web Services (AWS) to help organizations accelerate their cloud adoption journey and build real-time applications that enable analytical and operational workloads across cloud and hybrid environments. These partnerships are expected to be strategically beneficial for CFLT.
CFLT’s total revenue increased 70.5% from the prior-year quarter to $119.93 million in its fiscal fourth quarter, ended Dec. 31, 2021. Its gross profit for the quarter came in at $73.78 million, reflecting a 49.3% increase year-over-year. The net cash provided by financing activities stood at $1.01 billion, up 15,342.6% from the previous year’s quarter, while its total cash, cash equivalents, and restricted cash balance increased 3,541.4% year-over-year to $1.38 billion.
The Street expects CFLT’s EPS for its fiscal year ending Dec.31, 2022, to improve 13% year-over-year, while the $547.56 million consensus revenue estimate for the same period represents a 41.2% increase year-over-year.
Over the past month, the stock has gained 29.5% in price to close yesterday’s trading session at $38.95.
Among the 11 Wall Street analysts that have rated CFLT, five rated it Buy, and six rated it Hold. The 12-month median price target of $72.09 indicates an 85.1% potential upside. The price targets range from a low of $48.00 to a high of $100.00.
AppLovin Corporation (APP)
APP in Palo Alto, Calif., is a mobile application technology company that provides software solutions and advanced tools to mobile application developers to develop their businesses by automating and optimizing the marketing and monetization of their apps.
On April 7, 2022, APP announced its partnership with The Trade Desk, Inc.(TTD), a global advertising technology leader, to provide seamless access to AppLovin Exchange (ALX), the largest mobile in-app Ad Exchange. The company expects this collaboration to help it achieve its goal of operating the most robust in-app advertising platform in the market.
Earlier this month, APP announced the completion of its acquisition of Wurl, a world leader in powering streaming TV, to extend its software platform capabilities into the Connected TV (CTV) market. “This partnership will allow us to scale our technology beyond mobile with the goal of bringing performance marketing to the CTV market and becoming the world’s largest advertising ecosystem in the world,” said Adam Foroughi, CEO and co-founder of APP.
APP’s revenue increased 55.6% year-over-year to $793.47 million in its fiscal fourth quarter, ended Dec. 31, 2021. Its income from operations grew 1,280.4% from its year-ago value to $58.53 million, while the net income attributable to APP rose 267.1% year-over-year to $31.37 million. Its net income per share increased 188.9% from its year-ago value to $0.08.
The $0.44 consensus EPS estimate for its fiscal quarter, ended March 31, 2022, represents a 22% improvement year-over-year. The $822.69 million consensus revenue estimate for the same quarter represents a 36.2% increase from the same period last year. It has an impressive earnings surprise history; it topped the Street’s EPS estimates in each of the trailing four quarters.
APP has gained 11.2% in price over the past month to close the last trading session at $48.96.
Among the 10 Wall Street analysts that have rated APP, nine rated it Buy, and one rated it Hold. The 12-month median price target of $98.20 indicates a potential upside of 100.6%. The price targets range from a low of $70.00 to a high of $128.00.
WalkMe Ltd. (WKME)
Headquartered in Tel Aviv-Yafo, Israel, WKME provides a cloud-based digital adoption platform in the United States and internationally that helps organizations maximize the impact of their digital transformation and accelerate the return on their software investment.
For its fiscal fourth quarter, ended Dec. 31, 2021, WKME’s total revenues increased 36.9% year-over-year to $48.56 million. Its gross profit grew 42.2% from its year-ago value to $40.28 million. Its net cash provided by investing activities stood at $3.93 million, reflecting a 155.9% increase year-over-year, while the cash, cash equivalents, and restricted cash balance was $277.25 million, up 340.8% from the previous year’s quarter.
WKME’s revenue for the quarter ending June 30, 2022, is expected to come in at $61.26 million, indicating a 30.9% year-over-year growth. Also, the company’s revenue is expected to grow 31.1% year-over-year to $253.38 million in the current fiscal year.
The stock has gained 30.9% in price over the past month and 1.6% intraday to close the last trading session at $15.31.
Each of the six Wall Street analysts that have rated WKME rated it Buy. The 12-month median price target of $28.17 indicates an 84% potential upside. The price targets range from a low of $19.00 to a high of $40.00.
Click here to check out our Software Industry Report for 2022
MNDY shares were trading at $132.05 per share on Monday morning, down $5.12 (-3.73%). Year-to-date, MNDY has declined -57.23%, versus a -7.32% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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