Increasing digitalization, advancements in cloud technology, and the integration of multichannel touchpoints are reshaping the software landscape. Efficient resource management and the need to analyze extensive data for actionable insights are driving the software market’s growth.
Amid this backdrop, investing in resilient software stocks, such as Autodesk, Inc. (ADSK), Salesforce, Inc. (CRM), and Intuit Inc. (INTU), ahead of their earnings reports could be advantageous. Before delving into the featured stocks, let’s examine the industry’s growth factors.
Businesses are rapidly leveraging software to optimize their operations, automate repetitive tasks, and gain visibility. Moreover, adopting advanced technologies such as Augmented Reality/Virtual Reality (AR/VR) and the Internet of Things (IoT) is further accelerating the industry’s expansion.
The increasing reliance on AI-driven solutions is also significantly fueling the sector's growth. According to Gartner, AI software spending is projected to reach $297.9 billion by 2027, with market growth accelerating from 17.8% to 20.4% annually, reflecting a 19.1% CAGR.
Furthermore, global software spending is expected to increase by 12.6% year-over-year, totaling $1.10 trillion this year. The impressive growth underscores the rising importance of software in modern business operations and highlights the potential for significant returns on investment in the software sector.
Considering these trends, let’s delve into the fundamentals of three Software – Application stocks approaching their earnings releases, starting with #3:
Stock #3: Autodesk, Inc. (ADSK)
ADSK offers 3D design, engineering, and entertainment technology solutions. The company’s products include AutoCAD Civil 3D, Building Connected, Autodesk Build, Revit, Inventor, Vault, Maya, ShotGrid, and 3ds Max. Moreover, it offers Wonder Studio, a cloud-based 3D animation and VFX solution.
With that being said, on May 21, ADSK announced the acquisition of Wonder Dynamics. The company aims to enhance 3D content creation for the media and entertainment industries using cloud-based AI technology. This could attract more customers in these sectors and expand ADSK’s market share.
On April 24, ADSK signed an interoperability agreement with the Nemetschek Group to improve collaboration and efficiencies for the architecture, engineering, construction, and operations (AECO) and media and entertainment (M&E) industries.
The partnership would streamline data exchange, optimize workflows, and reduce project times, leading to increased client satisfaction, higher product adoption, and, ultimately, more robust revenue growth for ADSK.
During the fiscal 2025 first quarter that ended April 30, 2024, ADSK’s total net revenue amounted to $1.42 billion, up 11.7% year-over-year. Its non-GAAP income from operations rose 21.3% from the year-ago quarter to $490 million. Furthermore, the company’s net income rose 56.5% from the prior year’s period to $252 million.
Additionally, the company’s non-GAAP net income per share stood at $1.87, a 20.6% year over year improvement.
Looking forward, ADSK is expected to report its fiscal 2025 second-quarter earnings on August 29, 2024. Analysts expect ADSK’s revenue for the quarter, which ended in July 2024, to increase 10.2% year-over-year to $1.48 billion. Its EPS for the same quarter is expected to grow 4.9% from the prior year’s quarter to $2.
Moreover, the company surpassed the consensus revenue and EPS estimates in all the trailing four quarters, which is impressive.
Shares of ADSK have gained 15.6% over the past nine months and 17.7% over the past year to close the last trading session at $239.29.
ADSK’s POWR Ratings reflect its robust prospects. It has an overall rating of B, which translates to a Buy in our proprietary system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
ADSK has a B grade for Quality, Growth, and Sentiment. It is ranked #31 out of 134 stocks in the Software – Application industry.
To see ADSK’s Value, Momentum, and Stability ratings, click here.
Stock #2: Salesforce, Inc. (CRM)
CRM is a customer relationship management (CRM) technology provider that offers a Customer 360 platform. This platform integrates systems and devices for a unified customer view. It supports third-party development and offers global sales, service, and subscription services, enabling data storage, lead tracking, and issue resolution.
On July 24, CRM and Workday, Inc. (WDAY), a leading provider of solutions to help organizations manage their people and finances, announced a new AI employee service agent. This AI will enhance employee efficiency by automating tasks, offering personalized support, and delivering data-driven insights.
The boost in productivity could attract more clients and improve CRM's service offerings, driving significant growth.
On May 22, CRM boosted its Einstein Copilot by adding new features for marketers and merchants. The trusted AI assistant now assists businesses with marketing and merchandising tasks and its previous sales and service functions.
These enhancements are expected to streamline operations and boost productivity, positioning CRM to attract more clients and fuel its growth.
For the fiscal 2025 first quarter that ended on April 30, 2024, CRM’s total revenues increased 10.7% year-over-year to $9.13 billion. Its non-GAAP income from operations rose 28.8% from the year-ago value to $2.93 billion.
Furthermore, the company’s non-GAAP net income and non-GAAP net income per share stood at $2.41 billion and $2.44 per share, up 43.8% and 44.4% from the prior-year quarter, respectively. Also, its free cash flow for the quarter stood at $6.08 billion, up 43.2% year-over-year.
CRM is scheduled to disclose its second quarter fiscal year 2025 results on August 28, 2024. Street expects CRM’s revenue for the quarter, which ended in July 2024, to increase 7.3% year-over-year to $9.23 billion.
Likewise, the company’s EPS is expected to grow 11.1% from the prior year’s quarter to $2.36. Furthermore, the company has surpassed the consensus EPS estimates in all of the trailing four quarters.
Shares of CRM have gained 17.8% over the past nine months to close the last trading session at $249.12.
CRM’s POWR Ratings reflect its solid prospects. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.
CRM has a B grade for Quality. It is ranked #27 out of 134 stocks in the Software – Application industry.
Click here to see the additional CRM (Growth, Value, Momentum, Stability, and Sentiment) ratings.
Stock #1: Intuit Inc. (INTU)
INTU is a global financial technology platform supporting consumers and small businesses with financial management, compliance, and marketing solutions. The company operates through four segments: Small Business & Self-Employed; Consumer; Credit Karma; and ProTax.
On June 20, INTU expanded its Intuit IDEAS (Invest, Develop, Empower, Accelerate, and Scale) program by partnering with the Los Angeles Urban League. The collaboration offers small businesses in Atlanta, Los Angeles, and Philadelphia free access to INTU products, services, business counseling, and coaching.
This expansion could drive growth by empowering small businesses, fostering innovation, and broadening INTU’s market reach.
On June 13, 2024, INTU announced its plan to acquire technology from Zendrive, a leader in mobility risk intelligence, to boost Credit Karma's offerings. Credit Karma, an INTU company, is renowned for its pioneering role in providing free credit scores and supporting various financial goals.
As part of this acquisition, Zendrive's key personnel will join Credit Karma to drive the innovation and adoption of Karma Drive, a usage-based auto insurance product. By integrating Zendrive's technology, INTU could significantly advance Credit Karma's growth and strengthen its position in the financial technology sector.
During the fiscal 2024 third quarter that ended April 30, 2024, INTU’s total net revenue increased 11.9% year-over-year to $6.74 billion. Its non-GAAP operating income grew 10.5% from the year-ago value to $3.71 billion.
Moreover, the company’s non-GAAP net income and non-GAAP net income per share came in at $2.80 billion and $9.88, up 11.1% and 10.8% from the prior year’s quarter, respectively.
INTU is slated to disclose fourth-quarter earnings for fiscal 2024 on August 22. Analysts expect INTU’s revenue and EPS for the quarter, which ended in July 2024, to increase 13.8% and 12.7% year-over-year to $3.09 billion and $1.86, respectively. Furthermore, the company has surpassed the consensus EPS estimates in all four trailing quarters.
INTU’s sturdy fundamentals are apparent in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary system.
INTU is ranked #26 out of 134 stocks within the industry. It has an A grade for Quality and a B for Growth and Sentiment.
Click here to see INTU’s Value, Momentum, and Stability ratings.
What To Do Next?
Discover 10 widely held stocks that our proprietary model shows have tremendous downside potential. Please make sure none of these “death trap” stocks are lurking in your portfolio:
CRM shares rose $1.36 (+0.55%) in premarket trading Friday. Year-to-date, CRM has declined -4.54%, versus a 12.09% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
3 Software Stocks to Buy Ahead of Their Earnings Reports StockNews.com
