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Highlights
- Software as a Service or ‘SaaS’ companies earn recurring income from software sales.
- The California-based Adobe Inc. (NASDAQ:ADBE) booked a net income of US$3.59 billion or US$7.45 per share diluted for the nine months ended Sept 3, 2021.
- Mountain View, California-based Intuit Inc. (NASDAQ:INTU) stock generated a YTD return of 70.86%; it has a P/E ratio of 85.32.
The Software as a Service or ‘SaaS’ companies have performed well in 2021. SaaS is an important segment of software providers as it provides them a steady recurring income.
Customers who buy their products receive continuous software updates, ensuring a steady regular income for the software providers.
The SaaS segment will continue to be one of the fastest-growing areas, with more SaaS customization and higher technology penetration in 2022.
Here we discuss two SaaS stocks that may continue their growth momentum in 2022.
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Adobe Inc. (NASDAQ:ADBE)
The San Jose, California-based Adobe has a market capitalization of US$268.7 billion. The company provides digital marketing, documents management, and content creation software and services to customers.
Adobe Inc. founded in 1982, offers SaaS products and services for web developers, video editors, photographers, students, marketers, etc.
Its three revenue segments are Subscription, Product, and Service & Other. The subscription segment generates the highest revenue.
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For the nine months ended Sept 3, 2021, the company earned revenue of US$11.7 billion compared to US$9.44 billion for the nine months ended Aug 28, 2020.
Its net income for the period was US$3.59 billion, or US$7.45 per share diluted, compared to US$3.01 billion in the same period a year ago.
It reported cash and cash equivalents of US$4.62 billion as of Sept 03, 2021, versus US$4.47 billion as of Nov 27, 2020. Its P/E ratio is 56.36, and the forward P/E one year is 51.34.
The stock closed at US$569.36 on Dec 28, 2021. It rose 13.43% YTD.
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Intuit Inc. (NASDAQ:INTU)
Intuit, founded in the mid-1980s, is based in Mountain View, California. The technology company provides personal tax solutions (TurboTax), accounting software for small businesses called QuickBooks, and professional tax offerings solution, Lacerte. It is a leading small business accounting and DIY tax-filing software firm based on market share.
Its current market capitalization is US$182.6 billion. Its dividend yield and the annualized dividend are 0.42% and US$2.72, respectively.
For the first quarter of fiscal 2022, ended Oct 31, 2021, it posted net revenue of US$2.00 billion compared to US$1.32 billion for the same period of the previous year.
It booked a net income of US$228 million in Q1, 2022, compared to US$198 million in the corresponding period of the previous year.
Its cash and cash equivalents were US$2.84 billion as of Oct 31, 2021, compared to US$2.56 billion at the end of July 31, 2021. Its P/E ratio is 85.32, and the forward P/E one year is 83.95.
The INTU stock closed at US$649.78 on Dec 28, 2021. The stock gained 70.46% YTD.
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Bottomline
The software and SaaS companies saw robust sales during the pandemic lockdowns. However, investors should evaluate the companies and the broader market before investing in stocks.
