Pure-Play Cloud Computing SaaS Stocks Rebounded In June

By Lorimer Wilson of munKNEE.com
Sunday, June 30, 2024 7:15 PM EDT

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An Introduction

The sell-off in the munKNEE Pure-Play Cloud Computing SaaS Stocks Portfolio over the last 2 months (down 6% in April; down 15% in May) came to an end in June rebounding by 1.0%.

What is SaaS?

SaaS, also known as cloud application services, is the most commonly used service within the cloud market. SaaS platforms make software available to users over the internet, usually for a monthly subscription fee. They are typically ready-to-use and run from a users’ web browser, which allows businesses to skip any additional downloads or application installations.. SaaS accounts for 38.5% of cloud computing revenue. (Source) Also, read Cloud Computing 101.

What is a Pure-Play Company?

A pure play company concentrates all its efforts on a single line of business, and in this context, it’s cloud computing and, as such, those companies that are highly diversified, i.e., do not generate at least 50% of their sales from cloud computing products and services, are excluded from the munKNEE Pure-Play Cloud Computing SaaS Stocks Portfolio of 11 companies.

What Is the CAGR Of the SaaS Cloud Computing Market? 

According to Fortune Business Insights, the global cloud computing SaaS market is expected to experience a CAGR of 18.4% between now and 2032 as are the continued major increases (+14.5% in 2022; +18.6% in 2023 source) in the average rental rate of data centers (cloud computing allows organizations to rent rather than buy IT).

The munKNEE Pure-Play Cloud Computing SaaS Stocks Portfolio

Below is a description of each constituents area of focus, their performances last week, in descending order, and in June and the most recent news, analyses and commentary on them where available.

  1. Datadog (DDOG): up 10.3% last week; up 11.1% in June
  2. Atlassian (TEAM): up 8.1% last week; up 12.2% in June
  3. Okta (OKTA): up 8.0% last week; up 5.8% in June
    • Company Description: offers products and services to manage and secure customer identities and a suite of security capabilities that protects customers from different types of malicious traffic
    • Market Capitalization: $15B
    • Most Recent News, Analyses, and Commentary:
  4. Workday (WDAY): up 6.6% last week; down 1.1% in June
  5. Cloudflare (NET): up 5.3% last week; up 22.4% in June
    • Company Description: provides an integrated cloud-based security solution to secure a range of combination of platforms and offers website and application performance solutions
    • Market Capitalization: $28B
    • Most Recent News, Analyses, and Commentary:
  6. Salesforce (CRM): up 4.7% last week; up 3.7% in June
  7. ServiceNow (NOW): up 4.4% last week; up 13.1% in June
  8. MongoDB (MDB): up 3.8% last week; up 3.9% in June
    • Company Description: provides general-purpose database platforms worldwide and offers professional services comprising consulting and training
    • Market Capitalization: $18B
    • Most Recent News, Analyses, and Commentary:
      • MongoDB: An Overlooked Player in the $4 Trillion ‘AI Party’
  9. Snowflake (SNOW): up 3.3% last week; down 0.8% in June
    • Company Description: offers Data Cloud which enables customers to consolidate data into a single source to drive meaningful business insights, build data-driven applications, and share data and data products
    • Market Capitalization: $45B
    • Most Recent News, Analyses, and Commentary:
  10. HubSpot (HUBS): up 1.3% last week; down 3.4% in June
    • Company Description: provides a cloud-based customer relationship management (CRM) platform for businesses
    • Market Capitalization: $30B
    • Most Recent News, Analyses, and Commentary:
  11. Zoom Video (ZM): up 0.5% last week; down 3.3% in June

Conclusion

SaaS companies benefit from recurring revenue streams so their long-term growth depends on adding new customers and expanding spending from existing customers and, since their customers traverse the whole economy, it makes SaaS companies susceptible to the effects of a broad slowdown.

Innovation is a key driver of customer retention and expansion, but so is the economic cycle and, currently, customers are maintaining tight spending and are mindful of their costs which has accounted for a +5.4% return in the portfolio last week, the +1.0% return in June and the -8.0% YTD weakness in the portfolio.

More By This Author:

These 4 Pure-Play Quantum Computing Stocks Fell 13.6%, On Average, In June
Largest Semiconductor IDM Stocks Down In June; Up 13% YTD
Pure-Play Custom Design Software Stocks Up 7% In June; Now Up +23% YTD

Disclosure: None  

This article has been composed with the exclusive application of the human intelligence (HI) of the author. No artificial intelligence (AI) technology has been deployed. ...

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