Sustained demand for software products and services amid digital transformation initiatives across several industries, growing cybersecurity concerns, and the e-commerce boom are driving the growth of the software market. Gartner forecasts worldwide software spending to grow 12.7% year-over-year to exceed $1.03 trillion in 2024.
With the industry’s promising outlook, investors could consider investing in the top software stocks CCC Intelligent Solutions Holdings Inc. (CCCS), RingCentral, Inc. (RNG), and WalkMe Ltd. (WKME) this month.
The U.S. software industry is expanding rapidly due to increased digital transformation efforts across industries, driving demand for solutions in AI, cloud computing, and cybersecurity. Growing cybersecurity threats and the adoption of edge computing are major drivers, offering opportunities for software providers to meet evolving business needs.
The U.S. software market is estimated to grow at a CAGR of 7.2% during the forecast period from 2024 to 2030.
Besides, the SaaS market is booming globally due to the increased adoption of cloud-based solutions and investments in advanced technologies like AI and IoT. Key players are expanding through mergers, acquisitions, and new launches to meet rising demand across various regions. The global SaaS market is expected to grow at a CAGR of 18.7% to reach $908.21 billion by 2030.
In recent times, the application development software market has been thriving due to rising demand for tailored solutions, fast mobile app development, agile methodologies, widespread cloud adoption, and the emergence of low-code/no-code platforms, driving innovation and efficiency in businesses.
The global application development software market is projected to grow at a CAGR of 14.7% to reach $543.60 billion by 2030.
Considering these encouraging market trends, let’s discuss the fundamentals of three top software stock picks: CCCS, RNG, and WKME.
CCC Intelligent Solutions Holdings Inc. (CCCS)
CCCS provides cloud-based SaaS for property and casualty insurance in the US and China, streamlining digital workflows and leveraging AI. Its platform connects insurers, repairers, and other stakeholders for efficient collaboration and commerce.
On January 16, 2024, CCCS announced the availability of an advanced data security feature on its CCC ONE® platform, enabling collision repairers to redact sensitive VIN digits and personal information before sharing estimates and prioritizing customer privacy.
This enhancement aims to mitigate risks of unauthorized access to customer data, empowering repair facilities to safeguard information while conducting business with third-party partners.
In the fourth quarter, which ended December 31, 2023, CCCS’ revenues increased 12% year-over-year to $228.60 million. The company’s adjusted operating income and net income grew 25.6% and 34.2% from a year-ago quarter to $58.99 million and $90.65 million, respectively. Its adjusted EBITDA increased 24.9% from the previous year's quarter to $100.05 million.
For the fiscal year 2024, the company projects revenues in the range of $942 million to $950 million, with adjusted EBITDA expected to be between $387 million and $395 million.
Analysts anticipate CCCS’ revenue to increase by 8.4% year-over-year to $1.03 billion, and its EPS is expected to grow 12.3% year-over-year to $0.41 for the fiscal year ending December 2025. Moreover, the company surpassed consensus revenue and EPS estimates in each of the trailing four quarters, which is promising.
CCCS’ shares have surged 11% over the past nine months and 42.6% over the past year to close the last trading session at $12.26.
CCCS’ POWR Ratings reflect this robust outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted optimally.
The stock has an A grade for Growth and a B for Momentum, Stability, and Sentiment. In the B-rated Software - SAAS industry, CCCS is ranked #5 among 19 stocks.
To explore more ratings for CCCS’ Value and Quality, click here.
RingCentral, Inc. (RNG)
RNG offers cloud-based communication and collaboration solutions worldwide, including video meetings, contact center software, and unified messaging. The company’s products cater to various industries, providing a seamless experience across voice, video, messaging, and collaboration modes for businesses of all sizes.
On March 11, 2024, RNG and Optus collaborated on Optus Loop, a cloud communications solution tailored for Australian businesses, combining RNG’s innovative platform with Optus’ network expertise. This partnership aims to provide agile and reliable communication tools, empowering organizations to enhance productivity and growth.
On February 5, RNG launched a patient care solution for healthcare organizations, integrating with top EHR providers and leveraging AI-driven communications to streamline workflows and enhance patient experiences. This initiative aims to modernize healthcare communication and documentation, optimizing patient engagement and care delivery processes.
RNG's total revenues grew 8.9% from the previous year's quarter to $571.27 million in the fourth quarter that ended December 31, 2023. Its non-GAAP income from operations and EBITDA rose 59.3% and 48.9% year-over-year to $116.96 million and $138.03 million, respectively. The company's non-GAAP net income per share increased 43.3% year-over-year to $0.86.
For the fiscal year 2024, RNG provides guidance, including a subscription revenue range of $2.26 billion to $2.29 billion and a total revenue range of $2.37 billion to $2.40 billion with similar growth. Additionally, the company projects a non-GAAP EPS range of $3.50 to $3.58.
Street expects RNG’s revenue and EPS to grow 8.3% and 14.5% year-over-year to $2.58 billion and $4.06, for the fiscal year ending December 2025. Also, the company surpassed consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.
RNG’s stock has surged 16.2% over the past month and 20.2% over the past six months to close the last trading session at $36.33.
RNG’s POWR Ratings reflect its strong prospects. The stock has an overall B rating, translating to a Buy in our proprietary rating system.
The stock has an A grade for Value and a B for Growth and Quality. RNG is ranked #8 among 44 stocks within the B-rated Software - Business industry.
Click here to see RNG’s ratings for Momentum, Stability, and Sentiment.
WalkMe Ltd. (WKME)
Based in Aviv, Israel, WKME provides a cloud-based digital adoption platform globally, providing actionable insights, software stack, and workflows to streamline digital transformation. Its solution creates a transparent layer over any software, enabling intuitive access across various devices for enhanced user experience.
On February 20, 2024, WKME introduced Workflow Accelerators, predefined solutions to eliminate friction in critical workflows like employee onboarding and sales management, driving business efficiency and software adoption. These solutions are based on insights from over 600,000 deployments, aiming to improve productivity and revenue growth for businesses.
During the fourth quarter, which ended December 31, 2023, WKME’s total revenues increased 4.7% from the prior-year quarter to $67.89 million. The company's non-GAAP operating income amounted to $4.82 million, compared to a non-GAAP operating loss of $10.49 million in the year-ago period.
Moreover, its non-GAAP net income attributable to WKME was $6.84 million and $0.07 per share, compared to its non-GAAP net loss of $8.89 million and $0.10 per share in the previous-year quarter.
For the fiscal year 2024, the company anticipates revenue in the range of $279 million to $283 million, alongside non-GAAP operating income expected to be between $8 million and $11 million.
Street expects WKME’s revenue and EPS for the fiscal year (ending December 2024) to increase 5.7% and 292% year-over-year to $282.22 million and $0.16, respectively. In addition, the company topped consensus revenue and EPS estimates in three of the trailing four quarters.
The stock has gained 1.1% intraday to close the last trading session at $8.70.
WKME’s robust fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
It has an A grade for Sentiment and a B for Growth and Stability. Within the B-rated Software - Application industry, WKME is ranked #9 among 132 stocks.
In addition to the POWR Ratings stated above, access WKME’s Value, Momentum, and Quality ratings here.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
CCCS shares were trading at $12.13 per share on Thursday morning, down $0.13 (-1.06%). Year-to-date, CCCS has gained 6.50%, versus a 8.25% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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