The growing shift of enterprises towards software as a service (SaaS) from an on-premises model owing to the high cost of on-premises software deployment is projected to propel the software market growth. Therefore, the global SaaS market is projected to grow at a CAGR of 12% by 2030.
The hybrid cloud model is becoming increasingly popular, offering the benefits of both public and private clouds. Additionally, vertical SaaS solutions are gaining popularity as they cater to specific industry needs, such as retail analytics and business intelligence.
Against this backdrop, let’s compare two established software stocks to analyze which software stock is poised for greater growth: Vimeo, Inc. (VMEO) and Olo Inc. (OLO).
The Case for Vimeo, Inc. Stock
Valued at $1.33 billion by market cap, Vimeo, Inc. (VMEO) provides video software solutions worldwide. It offers turnkey cloud-based solutions, including video hosting and management, intuitive video creation and editing, insightful analytics, artificial intelligence language translations, and enterprise tools.
VMEO’s stock has soared 37.4% over the past year to close the last trading session at $5.77.
VMEO’s trailing-12-month gross profit and levered FCF margins of 78.26% and 11.33% are 49.7% and 33.2% higher than the respective industry averages of 52.30% and 8.51%.
For the year ended December 31, 2024, VMEO’s revenue amounted to $417.01 million, and its gross profit was $326.28 million. The company’s net earnings came in at $27.01 million, up 22.6% year-over-year, while its EPS was $0.16 for the quarter.
Analysts expect VMEO’s revenue for the fiscal first quarter ending March 2025 to be $101.57 million. For the second quarter ending June 2025, Street expects its EPS to be $0.01. The company surpassed its revenue estimates in each of the trailing four quarters, which is promising.
VMEO’s POWR Ratings reflect its positive outlook. It has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has a B grade for Value and Quality. It is ranked #9 in the 18-stock Software - SAAS industry. Beyond what is stated above, we’ve also rated VMEO for Growth, Momentum, Stability, and Sentiment. Get all VMEO ratings here.
The Case for Olo Inc. Stock
Valued at $1.14 billion by market cap, Olo Inc. (OLO) operates an open SaaS platform for restaurants in the United States. The company's platform enables on-demand digital commerce operations covering digital ordering, delivery, front-of-house management, and payments.
OLO has gained 48.8% over the past nine months to close the last trading session at $6.86.
In terms of the trailing-12-month gross profit margin, OLO’s 54.90% is 9.5% higher than the 50.15% industry average. However, its 0.31% trailing-12-month CAPEX/Sales is 85.7% lower than the industry average of 2.17%.
OLO’s sales for the fourth quarter that ended December 31, 2024, increased 21% year-over-year to $76.10 million. However, the company’s net loss came in at $635 million. Its non-GAAP net income per share attributable to Class A and Class B common stockholders came in at $0.06.
Street expects OLO’s revenue for the first quarter ending March 2025 to increase 16.4% year-over-year to $77.44 million. The company’s EPS for the same quarter is expected to increase 20% year-over-year to $0.06. Moreover, the company surpassed consensus revenue estimates in each of the trailing four quarters.
OLO’s mixed fundamentals are reflected in its POWR Ratings. The stock has an overall C rating, translating to a Neutral in our proprietary rating system.
OLO has a C grade in Value, Momentum, Stability, Sentiment, and Quality. It is ranked #10 in the same industry.
Click here for the additional POWR Ratings for OLO (Growth).
Vimeo vs. Olo Inc.: Which Software Stock Is Poised for Greater Growth?
The software market is experiencing significant growth, driven by the increasing use of mobile apps and the shift towards cloud computing. SaaS adoption is fueled by the proliferation of smartphones and tablets, enabling employees to work remotely and access business information in real-time.
Leading software companies like VMEO and OLO stand to capitalize on the optimistic industry outlook. However, VMEO’s higher profitability and promising near-term outlook favor it as the better stock pick.
Our research shows that the odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Software - SAAS industry here.
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VMEO shares were trading at $5.72 per share on Thursday afternoon, down $0.05 (-0.87%). Year-to-date, VMEO has declined -10.63%, versus a 0.24% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
Vimeo vs. Olo Inc.: Which Software Stock Is Poised for Greater Growth? StockNews.com
