Such businesses often have loyal customers who find it difficult or difficult to switch to another competitor or competitor’s software. This feature ensures that the company can gradually grow its top line while generating more customers.
With the convenience of the platform, customers can easily log in to enjoy the benefits of the service, creating a win-win situation for both seller and customer. As a SaaS company expands its presence and pulls in new customers to offer more features, it keeps new customers hooked, thereby helping to grow the business continuously.
Here are three attractive SaaS companies you should consider buying.
Data Source: Document Fiscal years end January 31.
The digital signature specialist has seen significant improvement in its operations and net income, both of which turned positive in fiscal 2024. Additionally, the company saw free cash flow nearly double from $445.1 million to $887.1 million over the same period.
This strong performance continued through the first nine months of fiscal 2025. Revenue rose 7.4 percent year over year to $2.2 billion, while operating income rose more than sixfold to $139.5 million. Net income was $984.4 million, a significant increase from last year’s $46.7 million, helped by a tax benefit of more than $804 million.
If we include this one-time item, pre-tax profit more than doubles to $180 million year over year. The business also generated positive free cash flow of $640.7 million, up slightly from $638.6 million in the same period last year.
Docusing continues to innovate by releasing artificial intelligence (AI) features into its Intelligence Agreement Management (IAM) platform. The latest release includes the ability to extract insights from various document types while allowing for the import of documents from various third-party providers. Box, DropboxAnd AlphabetGoogle Drive.
At the company’s inaugural Docusign Discover event last November, the company launched Docusign for Developers, a tool and resource designed for developers and entrepreneurs to better manage their contracts. This startup integrates well with IAM and can help the platform expand even further. Management believes that Docusing’s total addressable market is $50 billion, which provides ample opportunities for the digital signature and agreement management company to grow further.
CrowdStrike (NASDAQ: CRWD ) Falcon is a cybersecurity company with a cloud platform that provides data, identity and endpoint protection for businesses. The business uses AI for threat detection and monitoring to keep its customers’ systems secure. CrowdStrike has seen its revenue more than double from $1.4 billion to more than $3 billion from fiscal 2022 to fiscal 2024. Like Doxing, the cyber security company became profitable in fiscal year 2024, as shown in the chart below.
|
Measure
|
2022
|
2023
|
2024
|
|
Revenue (in billions)
|
1.452 dollars
|
2.241 dollars
|
3.056 dollars
|
|
Operating Income (in millions)
|
($142,548)
|
($190,112)
|
($1.995)
|
|
Net Income (in millions)
|
($234,802)
|
($183,245)
|
89.327 dollars
|
Data Source: CrowdStrike Fiscal years end January 31.
CrowdStrike has not only been able to grow its revenue during this period, but its free cash flow generation has risen significantly, doubling from $441.8 million in fiscal 2022 to $940.2 million in fiscal 2024.
The strong performance continued in the first nine months of fiscal 2025, with CrowdStrike posting a 31% year-over-year revenue increase to $2.9 billion. Net income more than doubled to $73 million. The company generated free cash flow of $827.1 million, up 26 percent from last year’s $656.6 million.
Annual recurring revenue ended the third quarter at more than $4 billion, an impressive 27 percent increase from $3.2 billion year-over-year. These numbers are encouraging and show the steady growth of the business.
Founder and CEO George Kurtz said CrowdStrike boasts a 97% overall retention rate for the Falcon platform, which demonstrates the tenacity of its customer base. The company continues to roll out enhanced offerings that include cloud security, identity protection, and endpoint security, among others.
Other achievements include the establishment of strategic partnerships Fortinet To provide firewall protection to more than 150,000 small and medium-sized businesses to ease security requirements, and to work to extend its partnership with 1Password.
CrowdStrike’s total reachable market is $116 billion this calendar year, but is expected to grow to $250 billion by 2029.
HubSpot (NYSE: HUBS ) It provides a unified platform to help businesses connect and achieve better sales and marketing results. The platform offers AI-powered engagement centers, community networking and customer relationship management services. The company may not be profitable yet but it has grown its revenue and gross profit remarkably over the years as shown below.
|
Measure
|
2021
|
2022
|
2023
|
|
Revenue (in billions)
|
1.301 dollars
|
1.731 dollars
|
2.170 dollars
|
|
Gross profit (in billions)
|
1.042 dollars
|
1.417 dollars
|
1.825 dollars
|
|
Gross margin
|
80.1%
|
81.8%
|
84.1%
|
Data Source: HubSpot Fiscal years end December 31.
Crucially, gross profit grew at a faster clip than revenue, from 80.1% to 84.1% from 2021 to 2023. The business grew from $176.8 million in 2021 to $250.7 million in 2023, generating consistent positive free cash flow.
HubSpot’s strong financial results continued for the first nine months of 2024. Revenue grew 21.2% year-over-year to $1.92 billion, while gross profit increased 22.2% to $1.63 billion. Gross margin improved further from 84.2% to 84.9%. Free cash flow increased 81% to $312.5 million, demonstrating HubSpot’s ability to generate higher free cash flow over time. The company’s customer base also grew 23 percent to 238,000, up from 31,000 in the first quarter of 2017.
In addition to organic growth, HubSpot has relied on acquisitions to grow its business. Last October, the company acquired Cacheflow, a business-to-business subscription payment management company. This acquisition powers HuSpot’s suite of services including subscription payment management and configuration, pricing and quoting (CPQ) solutions.
Then, in December, HubSpot acquired Frame AI, an AI-powered conversation intelligence platform. By tapping into Frame AI’s capabilities, HubSpot leverages its ability to integrate structured and unstructured data to help its clients make sense of conversations and translate them into actionable insights.
Management identified a $76 billion addressable market last year that will grow to $128 billion by 2029. Of this pie, HubSpot accounts for less than 10% of the market, giving the company ample opportunity to grow.
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Susan Frey, an executive at Alphabet, is a member of the Motley Fool’s board of directors. Royston Young It has a place in the alphabet. The Motley Fool has positions and recommends Alphabet, CrowdStrike, Docusign, Dropbox, Fortinet, and HubSpot. The Motley Fool recommends boxing. The Motley Fool has Disclosure Policy.
3 No-Brainer Software-as-a-Service Stocks Buy Now Originally published by The Motley Fool.
