Metaverse is becoming the center of attraction for major tech and software giants around the globe because it amalgamates augmented reality (AR), virtual reality (VR), and the physical world. According to PR Newswire, the global metaverse market is set to reach $758.6 billion by 2026.
While anticipated interest rate hikes to combat record high inflation have contributed to the overall tech industry’s underperformance of late, the software industry’s long-term prospects look bright. The industry is playing a significant role in shaping the metaverse world, which is expected to attract heavy engagement by consumers.
Therefore, we think it could be wise to bet on fundamentally sound software stocks Adobe Inc. (ADBE), Autodesk, Inc. (ADSK), Unity Software Inc. (U), and Fastly, Inc. (FSLY). The companies are involved in the transition to the metaverse world. And their stocks are currently trading below their 52-week highs, representing attractive entry points.
Adobe Inc. (ADBE)
ADBE operates as a diversified software company worldwide. The San Jose, Calif.-based concern’s segments include Digital Media; Digital Experience; Publishing, and Advertising. The company offers its products and services directly to enterprise customers.
On Dec. 16, 2021, Dan Durn, executive vice president and CFO, ADBE, said, “With an estimated $205 billion addressable market, we are well positioned for significant growth in the years ahead with our industry-leading products and platforms.”
ADBE’s subscription revenue came in at $3.81 billion for the fourth quarter, ended Dec. 3, 2021, up 22.4% year-over-year. Its operating income increased 23.5% year-over-year to $1.5 billion. The company’s total assets were $27.24 billion for the period ended Dec. 3, 2021, versus $24.28 billion for the period ended Nov. 27, 2020.
Analysts expect ADBE’s revenue to be $20.61 billion in its fiscal 2023, representing a 14.8% year-over-year rise. The company’s EPS is also expected to increase 18% year-over-year to $16.27 for fiscal 2023. It surpassed the Street’s EPS estimates in three of the trailing four quarters.
Over the past year, the stock has gained 13.2% in price to close yesterday’s trading session at $516.58. It is currently trading 26.2% below its 52-week high of $699.54, which it hit on Nov. 22, 2021.
Autodesk, Inc. (ADSK)
ADSK provides 3D design, engineering, and entertainment software and services worldwide. Its technology spans architecture, engineering, construction, product design, manufacturing, media & entertainment - empowering innovators to solve challenges. ADSK is headquartered in San Rafael, Calif.
On Nov. 23, 2021, Andrew Anagnost, ADSK president, and CEO, said, “Our customers continue to embrace and prioritize digital transformation to drive growth, efficiency, and sustainability, generating strong demand for Autodesk’s platform. We are rapidly innovating and optimizing our business to enable more customers to experience our ecosystem and realize the opportunities ahead.”
For its fiscal year 2022 third quarter, ended Oct. 31, 2021, ADSK’s subscription revenue increased 21.1% year-over-year to $1.07 billion. Its total net revenue increased 18.2% year-over-year to $1.13 billion. The company’s non-GAAP income from operations was $365 million, up 27.1% year-over-year, and its non-GAAP EPS was $1.33, up 27.9% year-over-year.
ADSK’s revenue is expected to come in at $5.13 billion in its fiscal 2023, representing a 17.4% year-over-year rise. The company’s EPS is expected to increase 36.1% year-over-year to $6.83 for fiscal 2023. And it surpassed the Street’s EPS estimates in each of the trailing four quarters.
The stock is currently trading 26.1% below its 52-week high of $344.39, which it hit on Aug. 24, 2021, to close yesterday’s trading session at $254.35.
Unity Software Inc. (U)
U operates a real-time 3D development platform. The San Francisco company’s platform provides software solutions to create, run, and monetize interactive, real-time 2D and 3D content for mobile phones, tablets, PCs, consoles, and augmented and virtual reality devices.
On Dec. 1, 2021, U announced that it had completed the acquisition of Weta Digital’s tools, pipeline, technology, and engineering talent. Marc Whitten, Senior Vice President and General Manager Create Solutions at Unity, said, “We are thrilled to officially welcome Weta Digital’s highly talented engineering team to Unity and to begin the journey of integrating two powerhouse technologies.”
U’s revenue increased 42.6% year-over-year to $286.33 million in its fiscal third quarter, ended Sept. 30, 2021. Its net loss came in at $115.15 million, compared to a $144.72 million loss in the previous period. Also, its loss per share was $0.41, compared to a $0.97 loss per share in the year-ago period.
Analysts expect U’s revenue to increase 30.4% year-over-year to $1.42 billion in its fiscal 2022. The company’s EPS is estimated to increase 69.4% per annum for the next five years. It surpassed the EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 15.5% in price to close yesterday’s trading session at $113.07.
U is currently trading 46.2% below its 52-week high of $210, which it hit on Nov. 18, 2021.
Fastly, Inc. (FSLY)
FSLY operates an edge cloud platform for processing, serving, and securing its customer’s applications worldwide. The San Francisco-based company delivers an Infrastructure as a Service platform that enables developers to build, secure, and deliver digital experiences at the edge of the internet.
On Nov. 3, 2021, Joshua Bixby, CEO, FSLY, said, “Our foundational technology enables enterprise developers to build modern, distributed applications and digital experiences that maximize performance, programmability, and security, and we believe our global edge cloud network will be the future of how online content is created, secured, and delivered. As we continue to invest and execute against these opportunities, we are focused on achieving $1 billion in revenue by 2025.”
FSLY’s revenue came in at $86.73 million for the third quarter, ended Sept. 30, 2021, up 22.8% year-over-year. Its gross profit increased 10% year-over-year to $45.49 million. Furthermore, its total assets came in at $2.14 billion for the period ended Sept. 30, 2021, compared to $1.22 billion for the period ended Dec.31, 2020.
FSLY’s revenue is estimated to increase 20.5% to $421.26 million in its fiscal 2022. Its EPS is expected to grow 30% per annum for the next five years. In addition, it surpassed the EPS estimates in three of the trailing four quarters.
The stock is currently trading 76% below its 52-week high of $122.75, which it hit on January 27, 2021.
ADBE shares were trading at $529.73 per share on Thursday morning, up $13.15 (+2.55%). Year-to-date, ADBE has declined -6.58%, versus a -3.65% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
Take Advantage of the Dip and Buy These 4 Software Stocks Helping to Shape the Metaverse StockNews.com
