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Cloud Stocks: Top 20 for 2020

Posted on Tuesday, Dec 17th 2019

The year 2019 has come to an end and here we do a review of the best performing cloud stocks of 2019 and the most promising for 2020. The criteria for making this list are a strong strategy or performance in Platform-as-a-Service (PaaS), Artificial Intelligence (AI), and robust Developer Ecosystems.

Large Players with Revenue over $10B

1. The top company that leads on these fronts is Salesforce.com. Its PaaS offering and developer ecosystem are leaps and bounds ahead of any other company and it has also been executing well on its AI offering, Einstein. Salesforce expects to end the year with revenues of $16.99-$17 billion. Further analysis is available here and here.

Salesforce’s stock has climbed about 35% from its 52-week low of $120.16 in December last year. It is currently trading at $162, close to its 52-week high of $167.57 that it touched in April. Its market cap is $144 billion.

2. Microsoft has executed well on its PaaS strategy thus far. Early this year, it released a new AI-enabled edge appliance called The Data Box Edge. It acts as a bridge or an abstraction layer between the local data sources and cloud storage allowing organizations to use the appliance for processing, filtering, and analyzing the data before storing it in the cloud. For the fiscal year 2019, revenue was up 14% to $125.8 billion and net income was up 137% to $39.2 billion. Further analysis is available here and here.

Its winning strategy is reflected in its stock performance. Its stock is currently trading at an all-time high of $155.53 with a market cap of $1.2 trillion, up 65% from its 52-week low of $93.96 in December last year.

3. While Amazon is not a pure play cloud company, we like it for the way it executes both its e-commerce business and the cloud business. It leads the way in AI and has the added advantage of enormous data to execute on.

Its stock has improved 35% from its 52-week low of $1307 in December last year. It touched a 52-week high of $2,035.80 in July this year but is currently trading around $1707 with market cap of $877 million.

Mid-Sized Players with Revenue over $1B

1. On PaaS, Atassian is the top mid-sized player. We have seen it grow from a bootstrapped startup focused on its fundamentals to a company with over $1B in revenue that is acquiring capital-efficient startups. We love it for its discipline and culture, which we feel were pivotal to its success. Atlassian ended the year with revenues growing 37% to $1.21 billion.

Its stock is trading at $121 with a market cap of $29.6 billion, up 78% from its 52-week low of $75.75 nearly a year ago. It touched a 52-week high of $149.8 in August.

2. ServiceNow has an excellent platform, and this year it has partnered with bigger tech giants like Microsoft and Adobe to strengthen its developer ecosystem. It has also been building its AI capabilities through acquisitions. ServiceNow expects to end the year with subscription revenues of $3.3 billion.

Its stock is trading at $282 with a market cap of $53 billion, up 59% from its 52-week low of $158 nearly a year ago. It touched a 52-week high of $303.2 in August.

3. Twilio is a leading player in the Communications PaaS segment that looks promising. This year, it introduced the Twilio Media Streams API that leverages AI to understand the sentiment of the caller and address issues accordingly. Twilio expects to end the year with revenues of $1.114-$1.117 billion.

Its stock is trading at $99 with a market cap of $13.6 billion, up 35% from its 52-week low of $73.15 nearly a year ago. It touched a 52-week high of $151 in July.

4. Splunk has executed well on its PaaS strategy and developer ecosystem. Its platform allows third party developers to develop cloud-native Splunk apps for real-time, machine-generated Big Data applications. It recently announced the launch of Mission Control – an integrated security platform that includes its security information and event management (SIEM), user behavior analytics (UBA), and security orchestration, automation, and response (SOAR) offerings. Splunk expects to end FY 2020 with revenues of $2.3 billion.

Its stock is trading at $146.31 with a market cap of $22.8 billion, up 62% from its 52-week low of $90.08 nearly a year ago. It touched a 52-week high of $152.68 last month.

5. Veeva is another bootstrapped mid-sized player that has built a strong vertical cloud in pharma. This year it released its AI assistant Andi. We love its CEO Peter Gassner. Read my interview with him. We believe it could or should do a PaaS strategy in 2020. Veeva expects to end the year with revenues of $1.088-$1.091 billion.

Its stock is trading at $147.7 with a market cap of $21.8 billion, up 86% from its 52-week low of $79.26 nearly a year ago. It touched a 52-week high of $176.9 in July.

6. Cloud-based communication services provider RingCentral has had a stellar year thanks to its excellent partner strategy. It has integrated its new customer engagement platform Engage with Google Dialogflow for its AI and ML capabilities. It looks poised to cross $1B in revenue this year by enhancing its platform.

Its stock is trading at $165.7 with a market cap of $13.9 billion, up 137% from its 52-week low of $69.8 in December last year. It touched a 52-week high of $177.9 in October.

7. Workday entered the PaaS market last year when it opened up its Cloud Platform to developers. It is well-positioned to do a PaaS strategy in 2020 and is therefore on our radar. It expects to end the year with revenues of $3.6 billion.

Its stock is trading at $160.45 with a market cap of $36.9 billion, up 13% from its 52-week low of $141.7 in December last year. It touched a 52-week high of $226.8 in July.

Small Players with Revenue less than $1B

1. Among the smaller players, we like inbound marketing specialist Hubspot for its excellent management. It has done a nice job with its developer ecosystem. In 2020, we expect to see more from it on PaaS and AI. HubSpot expects to end the year with revenues of $669-$670 million.

Its stock is trading at $157.4 with a market capitalization of $6.7 billion, up 266% from its 52-week low of $108.4 in December last year. It had touched a 52-week high of $207.98 in August this year.

2. We like Alteryx for the strong momentum it is showing for its subscription-based end-to-end analytics platform. It was bootstrapped initially before it raised $163 million. It went public two years back at a valuation of about $840 million and a list price of $14.61.

Its stock is trading at $99.1 with a market capitalization of $6.45 billion, up 105% from its 52-week low of $48.34 in December last year. It had touched a 52-week high of $147.8 in September this year.


3. In the mission critical document signature space, we like DocuSign for its focus on the entire document management life cycle. It expects to end the year with revenues of $947-$951 million.

Its stock is trading at $73.6, with a market capitalization of $13.2 billion, up 103% from its 52-week low of $36.25 in December last year. It had touched a 52-week high of $76.28 in September this year.

4. Smartsheet has built a successful platform for enterprise collaboration. It has a rich feature set that allows developers to build apps, integrators, and connectors that power collaboration capabilities by automatically synchronizing data from critical business platforms. It expects to end the year with revenues of $265-$268 million.

Its stock is trading at $42.7, with a market capitalization of $5 billion, up 91% from its 52-week low of $22.01 in December last year. It had touched a 52-week high of $55.7 in July this year.

5. The year 2019 saw Anaplan working on its developer ecosystem, PaaS, and AI strategy. It forecast revenues of $346-$347 million for the year.

Its stock is trading at $52.7, with a market capitalization of $7.05 billion, up 125% from its 52-week low of $23.37 in December last year. It had touched a 52-week high of $60.36 in July this year.

6. We like Cloud Customer Service software company Zendesk for its focus on its platform and AI capabilities. It expects to end the current year with revenues of $813-$815 million.

Its stock is trading at $76.7, with a market capitalization of $8.6 billion, up 53% from its 52-week low of $50.05 in December last year. It had touched a 52-week high of $94.9 in July this year.

Cyber Security Players

We expect the cyber security space to see a lot of success and big winners in 2020. It is a secular trend with massive macro momentum. It would continue to see a lot of consolidation in 2020.

1.Palo Alto Networks spent about $1.25 billion on acquisitions in 2019 and ended the year with revenues growing 28% to $2.90 billion. We think it may acquire Zscaler in 2020.

Its stock might seem to be languishing a bit, but we expect it to recover in the long-term. It is trading at $229.7, with a market cap of $22.5 billion, up 36% from its 52-week low of $168.8. Its 52-week high is $260.6.

2. We like Qualys for its product innovation, focus on monetization, and its strategy of acquiring smaller, relevant players. It expects to end the current year with revenues of $321.2-$321.8 million. Its stock is trading at $84.9, with a market cap of $3.3 billion, up 28% from its 52-week low of $65.9. Its 52-week high was $97.1.

3. We like IAM leader Okta for its PaaS strategy and the way it has built a robust developer community around its platform. It also launched a $50M venture fund focusing on AI and ML. Its stock is currently trading at $116.2 with a market capitalization of $14 billion, up 113% from its 52-week low of $54.59 . It touched a 52-week high of $141.85 in July this year.

4. We like the way Proofpoint is expanding through partnerships and acquisitions. Proofpoint forecast revenues of $882.3-$884.3 million for 2019. Its stock is trading at $113.7 with a market capitalization of $6.4 billion, up 44% from its 52-week low of $78.69. It touched a 52-week high of $133.58 in July this year.

Related reading: Bootstrapping by Piggybacking

This segment is a part in the series : Cloud Stocks


. Smartsheet Acquiring Bootstrapped Startups to Drive Growth
. Bootstrapped Unicorn Atlassian is Acquiring Capital Efficient Startups
. Netflix Price Hike Ruffles Competition
. How Will Carbon Black Differentiate?
. ServiceNow Grows Through Addition of Capital-Efficient Startups
. Zendesk and Freshworks Follow Different Acquisition Strategies
. Tableau Grows Through Small Acquisitions
. Open Platform Strategy Stands Intuit in Good Stead
. Will GoDaddy Follow the PaaS Route?
. Adobe Delivers Via PaaS
. A Look at Oracle’s 2018 M&A Activity
. What Apps Will Drive More Traction for Cloudera?
. Slack's App Focus Will Be Key to Post-IPO Success
. IBM Counts on its Cloud and Platform for the Turnaround
. Atlassian Acquires From its PaaS Marketplace
. What Should SAP Acquire to Triple its Value by 2023?
. Expect ServiceNow to Acquire From App Marketplace
. Should Alarm.com Follow a PaaS Strategy?
. How Upwork Can Leverage the Virtual Company Trend
. Qualys Scouting For Acquisitions
. Should SAP Acquire Zendesk or Freshworks?
. HubSpot Counts on its API Strategy
. SurveyMonkey Eyes Acquisitions for Growth
. Workday Wants to Disrupt Cloud Computing Using Machine Learning
. Einstein and Open-Source Platform Lead the Charge for Salesforce
. DocuSign Prepares to Beat Rival Adobe
. Veeva Soars, But Dassault Acquires Medidata for $5.8 Billion
. Tableau Acquisition Signals Massive Analytics Push for Salesforce
. Oracle Joins Hands with Microsoft to Take on Amazon
. GoDaddy is Making Strategic Acquisitions for the Next Level of Growth
. Alteryx Sees Strong Momentum
. Adobe Leveraging Magento and Marketo to Deliver Blockbuster Performance
. Is Slack Overvalued?
. How Will Cloudera Address the Competition?
. Zoom is Not Bothered by Cisco or Microsoft
. Domo Counts on Enterprise Revenue for Growth
. Netflix Plays with Pricing and Games to Attract Subscribers
. CrowdStrike Has a Successful IPO
. Atlassian Crosses the Billion Dollar Revenue Milestone
. ServiceNow Believes Strength Lies in Tie-ups
. Partnerships are the Mantra for BlackLine
. SurveyMonkey Counts on Enterprise Segment for Growth
. HubSpot Soars to a New High
. Intuit Pushes AI to Simplify Tax Filing
. Splunk Sees Strong Cloud Momentum
. Forescout Partners with Big Names
. Smartsheet Tapping into the Government Sector
. Salesforce Continues its Shopping Spree
. Palo Alto Networks Targets the IoT Security Market
. DocuSign Focuses on the Mortgage Sector
. Oracle Brags About Autonomous Database
. Blackbaud Acquires YourCause to Grow Addressable Market
. The Market Expects a Lot More from Adobe
. Anaplan Makes its First Acquisition Post IPO
. Activist Investor Drives Market Interest in Box
. MongoDB's Formula for Success
. Coupa Aims for $1B Revenue
. Dropbox on a Rocky Road
. Medallia Banks on Acquisitions
. IBM Banks on AI
. Time For Skepticism with Netflix
. SAP Riding High on the Cloud
. Amazon's Faster Shipping Hurting its Earnings
. ServiceNow CEO Change Signals Focus on Acquisitions
. Will Google Acquire Fitbit?
. HubSpot Focuses on Its Platform
. BlackLine Partners with Google Cloud
. Rapid7’s Focus on Cloud SIEM Pays Off
. Splunk Bets Big on Data Streaming
. Intuit's QBO Scores Big
. VMware Builds Up With Acquisitions
. Palo Alto Targets $5B Revenue by 2022
. Workday Targeting Procure-to-Pay Cycle
. Will Salesforce Acquire DocuSign?
. Okta Targets Enterprise Customers
. MongoDB Eyeing China With Alibaba Partnership
. Twilio Counts on API Upgrades for Growth
. Adobe Revs up its Experience Platform
. Top 20 for 2020
. Anaplan Sees Expanding Use Cases
. Dropbox Gears Up to Regain Lost Valuation
. Forescout Fails to Deliver
. Enterprise Bet Pays Off for SurveyMonkey
. SAP Bets Big on Experience Management
. Twilio Steps up Investment in 2020 to Preserve Growth Momentum
. Zendesk, Freshworks Focus on Marketplaces and Integrations
. Proofpoint Targets Insider Threats Through Acquisition
. RingCentral's Powerful Partner Strategy Would Augment with PaaS
. Qualys Counts on Google and Microsoft for Growth
. Shopify Soars on Improved Merchant Offerings
. HubSpot Believes in the Importance of PaaS
. BlackLine Remains Focused on SAP Integration
. Recently Public Cloudflare has New Edge
. GoDaddy is on a Shopping Spree
. Intuit Targets Online User Base Through Acquisition
. Should Palo Alto Networks Acquire ZScaler?
. Why Salesforce Buying Vlocity Proves the Growing Importance of PaaS
. Datadog Performing Well Post Recent IPO
. Workday Should Open Up About its PaaS Success
. Anaplan Focuses on API Connectors for its Platform
. Veeva
. Five9 Strengthens its PaaS Focus
. RealPage Brings AI and SaaS to Real Estate
. Splunk Should Open up About its PaaS Metrics
. Okta Benefiting from App Diversity
. Oracle Sees Growth Momentum
. Xero Focuses on a PaaS Strategy
. DocuSign Resilient to COVID-19
. Smartsheet Looking up to Enterprise Customers for Growth
. Paylocity Delivers Solid Results
. Q2 Holdings Expands TAM with Acquisitions

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