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The COVID-19 pandemic has shaped how companies conduct their operations and doing their business. Employees transitioned into work-from-home setups, and various industries had to adapt. One of the significant changes that stayed in the current employment market are the hybrid-like operations. It raised the need for varying communication methods for both companies and their customers. The necessity for seamless remote collaboration amid global lockdowns highlighted the importance of these tools, catalyzing a paradigm shift in work culture. This shift has pushed companies in specific sectors to grow and uncover various opportunities for investors looking to capitalize on this hybrid workforce movement.
According to Stanford University research, the new work environment has helped make workers more efficient. It helps balance the employees' time at home and in the office, resulting in more productive employees.
One essential driver for this is companies specializing in CRM solutions that help employees and customers connect. This article will look at three companies with high growth potential and solid footholds to offer the best options for customers looking to employ a hybrid work environment.
Freshworks Inc. (FRSH)
Freshworks Inc. is a software-as-a-service (SaaS) company that offers customer relationship management (CRM), customer experience (CX), and human resource (HR) tools. The company’s products provide various solutions that cater to its clients' needs in sales, marketing, asset management, portfolio management, and enterprise management software. The company has been experiencing much growth with the strong client adoption of its software from companies like Bitkup and Village Roadshow Group.
The company reported a strong quarter with a 19% increase in year-on-year revenue, beating its earnings expectations by 23.08%. The company had a remarkable turnaround with its performance in both net cash from operating activities and its free cash flow results for the quarter. The company has gained momentum thanks to its market traction and continued innovation. Further, its integration of generative AI helped ensure swift value delivery to businesses of various sizes. Last, the company has also reported a positive outlook for the following quarters, with a commitment to innovate and continuously increase the company’s growth. This turnaround performance and strong growth prospects have put FRSH in one of our top CRM companies to buy.
Analyst Ratings
The company is rated as a “Moderate Buy” based on 9 Strong Buys, 1 Moderate Buy, and 6 Holds. The mean target price for FRSH is $22.93, and the high target price is $26.00, for an upside of 43.09%.
Workiva Inc. (WK)
Workiva Inc. is a regulatory reporting solution and cloud-based compliance software provider that helps businesses solve regulatory challenges using various platforms like customer relationship management (CRM) systems, human capital management (HCM), and governance risk. The company’s platform offers customer-controlled collaboration, data integrations, data linking, and auditing within the platform. The system is built within Alphabet’s Cloud platform and Amazon Web Services, created by the company’s proprietary and open-source technology.
Workiva’s latest financial quarter showed promising growth. Subscription revenue grew 21%, surpassing profit expectations. Revenue also increased by 19%, further helping the company improve its gross margins. According to its latest earning report, the company also projects further growth in its revenue and operational income. It also consistently succeeded in growing its large contracts to solidify its future outlook further. Its CEO, Julie Iskow, highlighted its unique ability to address the increasing need for regulatory compliance, transparency, and accurate reporting that helps further cement its product propositions to its customers. The combination of a strong portfolio of products and growing revenue has put WK on the top of our CRM providers to buy list.
Analyst Ratings
Analysts rate WK as a “Strong Buy.” based on 8 Strong Buys and 2 Hold recommendations. The mean target is $116.75, and the high target is $128.00, an upside of 35.25%.
HubSpot, Inc. (HUBS)
HubSpot, Inc. is a customer relationship management (CRM) platform provider that offers various tools for scaling business, a platform that helps with marketing, sales, service, and content management systems. Its integrated CRM platform provides clients an adaptable and cohesive customer experience. The company also offers other solutions for marketing automation, chatbots, analytics, predictive lead scoring, and lead generation. Its recent nomination in the Gartner Magic Quadrant report as a leader in B2B marketing for three straight years is a testament to its strong foothold in the industry.
The company reported a very impressive quarter with a substantial % revenue growth of 26%. It also beat earnings estimates by 90.48%. The company had a 25% increase in subscription revenue and a 31% increase in professional services segments. Its CEO, Yamini Rangan, emphasized that the company's focus on customer value and innovation has paid off, and it has raised its outlook for Q423 and the full year 2023 with expectations of further growth in revenue and net income. Its robust financial performance, strategic positions, and growth prospects make HUBS a compelling buy.
Analyst Ratings
Analysts rated HUBS as a “Strong Buy” based on 20 Strong Holds, 3 Moderate Buys, and 3 Holds. The mean target for HUBS is $560.62, and a high target is $695.00, an upside of 48.40%.
Final Thoughts
CRM companies are here to stay. As the workforce continues to evolve, so does the need to innovate the tools that accompany an efficient working environment. This evolution in workplace operations provides investors willing to conduct due diligence with an opportunity to ride the growth and adoption of new workforce operations.
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