Wall Street’s third quarter earnings season is close to winding down, with results in the days ahead due to come in from a variety of high-flying cloud-computing software companies.
Cloud-related software ETFs are trading near record highs, with the First Trust Cloud Computing ETF (NASDAQ:SKYY) up around 26% this year, as accelerated enterprise digitization trends resulting from the COVID-19 pandemic continue to drive demand for cloud-based offerings.
Below we highlight three fast-growing cloud leaders set to report robust earnings and revenue growth thanks to surging demand for their innovative products and services. Each is well worth considering ahead of their upcoming quarterly earnings reports.
1. CrowdStrike Holdings
- Earnings Date: Wednesday, Dec. 1, after market close
- EPS Growth Estimate: +25% YoY
- Revenue Growth Estimate: +56.4% YoY
- Year-To-Date Performance: +23.9%
- Market Cap: $59.9 Billion
Crowdstrike Holdings (NASDAQ:CRWD), which has topped Wall Street’s expectations for earnings and revenue in every quarter since going public in June 2019, is slated to report upbeat third quarter earnings. Consensus expectations call for the high-flying cloud-based cybersecurity specialist—whose technology is used to detect and prevent security breaches—to post Q3 earnings per share of $0.10, improving 25% from EPS of $0.08 in the year-ago period.
Revenue is forecast to increase about 56% year-over-year to an all-time high of $363.5 million, benefitting from robust enterprise demand for its Falcon cybersecurity platform amid the ongoing increase in cyber spending.
Perhaps of greater importance, investors will monitor growth in CrowdStrike’s annual recurring revenue (ARR)—an important sales metric used by software-as-a-service (SaaS) companies operating on a yearly subscription-based model. The cybersecurity firm said ARR surged 70% from a year earlier to reach $1.34 billion in Q2.
In addition, market players will keep an eye on CrowdStrike’s update regarding its total subscription customers. The endpoint security leader said it had 13,080 paying clients as of the end of its last quarter, representing year-over-year growth of 81%.
CRWD stock—which climbed to a record peak of $298.48 on Nov. 10—ended Tuesday’s session at $262.51, earning the Sunnyvale, California-based cybersecurity company a valuation of $59.9 billion.
CrowdStrike soared more than 300% in 2020, thanks to a growing wave in enterprise cybersecurity spending during the COVID-19 pandemic. However, this year's ascent has slowed, climbing just 23.9% in 2021.
2. Snowflake
- Earnings Date: Wednesday, Dec. 1 after market close
- EPS Growth Estimate: +82.1% YoY
- Revenue Growth Estimate: +91.5% YoY
- Year-To-Date Performance: +42.8%
- Market Cap: $120.9 Billion
Snowflake (NYSE:SNOW) beat earnings and revenue estimates for its last quarter in late August and is forecast to report strong double-digit growth for its third quarter results. Wall Street calls for the cloud-based data storage and analytics provider—which counts nearly half of the Fortune 500 companies as clients—to post a loss per share of $0.05, narrowing from a loss of $0.28 per share in the year-ago period.
Revenue is forecast to soar 91.5% year-over-year to a record high of $305.6 million, thanks to robust demand from large enterprises for its cloud-based data warehouse software. As such, investors will focus on Snowflake’s update regarding its active customer accounts to see if it can maintain its torrid pace of growth.
The cloud data warehousing specialist announced during its Q2 earnings report that it had 4,990 customers, up 60% from the same quarter a year earlier. Snowflake’s total number of customers generating over $1 million in annual recurring product revenue, which surged 107% to 116 in the last quarter, will also be in focus.
SNOW closed at $401.89 yesterday, within sight of its record peak of $428.68 reached in December 2020. At current levels, the San Mateo, California-based SaaS company—which made headlines last year when it became the biggest software IPO in history—has a market cap of $120.9 billion.
Year-to-date, SNOW stock has gained 42.8%, far outpacing the comparable returns of both the Dow and the S&P 500 in 2021, amid strong enterprise demand for its cloud-based services.
3. DocuSign
- Earnings Date: Thursday, Dec. 2, after market close
- EPS Growth Estimate: +109.1% YoY
- Revenue Growth Estimate: +39.1% YoY
- Year-To-Date Performance: +20.4%
- Market Cap: $52.6 Billion
DocuSign (NASDAQ:DOCU)—which crushed profit and sales records in the last quarter thanks to booming demand for its e-signature software—is scheduled to report another period of explosive growth. The consensus estimates call for the software specialty giant to post earnings per share of $0.46, more than doubling from EPS of $0.22 in the year-ago period. Revenue is forecast to jump about 39% year-over-year to a record $532.6 million, benefitting from an ongoing surge in demand for its Agreement Cloud e-signature platform.
Widely considered the leader in the e-signature market, market players will focus on DocuSign’s update regarding its enterprise customer additions amid the current remote work environment spurred by the COVID pandemic. The company said it had 714 customers with an annual contract value of greater than $300,000, up 37% from a year earlier.
In addition to the top- and bottom-line numbers, investors will concentrate on comments from DocuSign’s management regarding the outlook for the months ahead as the coronavirus pandemic eases and business travel normalizes.
DOCU stock reached a record high of $314.70 on Sept. 3. It ended at $267.74 last night, earning the San Francisco, California-based tech company a valuation of $52.6 billion.
The Company is widely viewed as one of the big pandemic winners, seeing its shares climb roughly 20% in 2021 as the ongoing shift to the work-from-home environment created strong enterprise drive for its e-signature tools.