The widespread disruption caused by the COVID-19 pandemic has reinforced the importance of cloud computing. The world’s need for remote business structures has accelerated the shift to cloud computing, which has driven a skyrocketing rally by the shares of cloud software stocks. This is evidenced by the First Trust Cloud Computing ETF’s (SKYY) 58.5% returns over the past year.
According to a survey by IDC, more than 90% of enterprises worldwide will be relying on a mix of on-premises/dedicated private clouds, multiple public clouds, and legacy platforms to meet their infrastructure needs by 2022.
In fact, organizations are increasingly partnering with multiple cloud providers. They are deploying cloud infrastructure at an unparalleled speed and scale to meet customer demand, while also maintaining flexibility. However, this rapid transition has increased the frequency of data breaches and cyber-attacks. This is forcing companies to operate within strict regulatory frameworks and to address new data privacy regulations.
DocuSign, Inc. (DOCU) and Cloudera, Inc. (CLDR) are companies that have been big winners in the pandemic. Both companies are scheduled to report their earnings this week. Will their forthcoming numbers help these stocks to resume their rally?
Click here to check out our Software Industry Report for 2021
DocuSign, Inc. (DOCU)
DOCU provides cloud-based eSignature software, DocuSign Agreement Cloud, which helps organizations to digitally prepare, execute, and act on agreements. Its key Agreement Cloud products include DocuSign Contract Lifecycle Management (CLM), Intelligent Insights, Gen for Salesforce, Negotiate for Salesforce, Guided Forms, Click, Identify, Standards-Based Signatures, Payments and eNotary.
In January, DOCU closed an offering of zero-percent convertible senior notes, due 2024. It raised $690.0 million in proceeds. DOCU intends to use the proceeds for working capital and other general corporate purposes.
DOCU’s total revenues have increased 53.5% year-over-year to $382.92 million in the third quarter, ended October 31, 2020. Its gross profit has increased 52% from its year-ago value to $285.09 million, yielding a gross margin of 74%. However, its top-line growth did not translate into generating profits. Its loss from operations has increased 10.2% year-over-year to $48.47 million, while its loss per share has risen 19.2% to $0.31 over the same period.
DOCU will host its conference call on March 11 to discuss its results for the fourth quarter and full-year 2021, ended January 31. Analysts expect DOCU’s revenues to increase 48.3% year-over-year to $407.65 million for the quarter. A consensus EPS estimate of $0.22 for the about-to-be-reported quarter represents an 83.3% improvement from the year-ago value. However, the stock has lost 8.1% in value year-to-date.
DOCU has an overall rating of C, which equates to Neutral in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
DOCU has a B grade for Growth and Momentum and a C for Stability and Quality. It is currently ranked #59 in the 112-stock Software - Application Industry.
In total, we rate DOCU on eight different levels. Beyond what we stated above, we have also given DOCU grades for Value and Sentiment. Get all DOCU’s ratings here.
Cloudera, Inc. (CLDR)
Based in California, CLDR provides a suite of data analytics and management products through two operating segments: subscription and services. The company enables enterprises to transform complex data into clear and actionable insights. It allows organizations to operate, manage and move workloads across multiple architectures, mixing on premises and cloud environments, including all major public cloud infrastructure providers.
On March 1, CLDR announced the availability of its Cloudera Data Platform (CDP) Operational Database on both Amazon Web Services (AWS) and Microsoft Azure. This cloud-native operational database enables faster development and deployment of mission-critical applications on any cloud platform.
In January, CLDR completed SOC 2 Type II Service Organization Control (SOC 2) certification for Cloudera Data Platform Public Cloud in accordance with attestation standards established by the American Institute of Certified Public Accountants (AICPA). The certification is an affirmation of customer trust in the Cloudera Data Platform for their Enterprise Data Cloud.
CLDR’s total revenues have increased 9.9% year-over-year to $217.90 million in the third quarter, ended October 31, 2020. Its non-GAAP income from operations has risen 698.9% from the year-ago value to $49.28 million, while its non-GAAP EPS has improved 600% to $0.15 over the same period.
CLDR will hold its earnings webcast on March 10 to discuss the financial results of its fourth quarter, ended December 31, 2020. Analysts expect CLDR’s revenues to increase 4.6% year-over-year to $221.43 million for the quarter. A consensus EPS estimate of $0.11 for the about-to-be reported quarter represents a 175% improvement from its year-ago value. The company has an impressive earnings surprise history; it beat the Street’s EPS estimate in three out of the trailing four quarters. The stock has gained 5.4% year-to-date.
CLDR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. CLDR has a B grade for Growth, Momentum and Value. In the Software - Business Industry, it is ranked #14 of 60 stocks.
Click here to see the additional POWR Ratings for CLDR (Sentiment, Quality and Stability).
Click here to check out our Software Industry Report for 2021
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DOCU shares were trading at $206.01 per share on Monday morning, up $1.70 (+0.83%). Year-to-date, DOCU has declined -7.33%, versus a 3.44% rise in the benchmark S&P 500 index during the same period.
About the Author: Rishab Dugar
Rishab is a financial journalist and investment analyst. His investment approach is to focus on quality stocks, trading at low prices, with business models that he readily understands.
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