One of the largest trends to come out of the previous decade has been the increasing use of cloud computing. Since Amazon introduced their Amazon Web Services (AWS) back in 2006, a whole industry has come from infrastructure-as-a-service (IaaS).

It is important to remember that there is a lot more to cloud than just storage.These possibilities give investors many ways to profit from the increasing drive to the cloud.

Let’s discuss two of these cloud companies that are not commonly known by investors, but could deliver huge profits in 2021:

1. HubSpot

While it started as an inbound marketing company, HubSpot quickly expanded to become a full customer relationship management solution.

The company has copied from the successful strategy used by salesforce.com, increasing its abilities with a set of successful acquisitions.

Due to this expansion, HubSpot now gives marketing and service support, in addition to content management. Each new product has resulted in a growing opportunity, with some predictions putting HubSpot’s whole addressable market at around $20 billion. The company has around 114,000 customers, which is nothing in comparison to the whole market size of over 3 million small- and medium-sized companies with a web presence.

During Q1, HubSpot gave a revenue increase of 41% y/y. Subscription revenue also jumped 41%, while service revenue climbed 43%. Also, the company’s total customer tally increased by 45% and spending per customer was close to the prior-year quarter.

Since late 2014, the company’s revenue has increased at a compound annual rate of 41%, while its international revenue also grew by 58%. Given this successful growth, HubSpot should be near the top of any tech investor’s buy-now list.

2. DocuSign

DocuSign gives companies and people tools to legally sign documents. The company is the leader in the market, with a total 70% marketshare that keeps growing. What investors might not get is that e-signatures are only the starting point of a large growing opportunity for the company, a fact that the company’s CEO, Dan Springer, highlights:

“Usually, e-signature is the initial step taken on a larger transition to digital management., he said on a recent earnings call. “So from a financial outlook, we think this increase in e-signatures is a good sign for future Agreement Cloud use.”

The Agreement Cloud is the company’s offering to help manage the whole cycle of agreements and legal contracts. For example, when a contract is completed, the system can create a bill automatically. If an agreement is up for renewal? A reminder is created. There are hundreds of such use cases for this product.

For DocuSign’s fiscal 2022 Q1, revenue increased 58% y/y, growing from 39% in the prior-year quarter. Perhaps more crucially, subscription revenue increased at an even faster rate, up 61%. At this same time, billings went up by 54%. Adjusted earnings per share (EPS) also more than tripled.

DocuSign brought in a total revenue of $1.5 billion in 2020, but the opportunity before it is much more vast. With their new Agreement Cloud, DocuSign executives say the total addressable market is now over $50 billion.

Author: Scott Dowdy

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