A little over six months ago, the World Health Organization declared the novel coronavirus a global health emergency. Since then, the pandemic has not only infected millions and caused hundreds of thousands of deaths, but it has produced significant economic disruption, widespread unemployment, and lasting changes to our everyday lives.
Through this uncertainty, technology has enabled us to adapt to a new normal, and as a result, many tech companies have thrived. DocuSign (NASDAQ:DOCU), Shopify (NYSE:SHOP), and Veeva Systems Inc (NYSE:VEEV) are three stocks that have soundly beat the market over the last six months.
This trio will not only survive the pandemic but will emerge stronger on the other side. Let's take a deeper look at each company and examine why this is the case.
DocuSign: The e-signature is just the beginning
As the coronavirus created social distancing norms, the ability to finalize an agreement electronically became a must-have for businesses. In its fiscal 2021 first quarter ended April 30, DocuSign's top line grew 39% year over year, up slightly from 38% growth recorded in the previous quarter. But the enterprise and commercial business, which made up 88% of revenue last quarter, saw its customer count grow 49% year over year, up from 33% growth in the fourth quarter. This acceleration bodes well for the future.
As customers realize the benefits of e-signatures, they are likely to expand its usage across their organizations. DocuSign saw 119% net dollar retention in the first quarter, up two percentage points sequentially. CEO Daniel Springer said that the 14,000 new customers adopting e-signatures during the quarter are taking "the first step that many customers take on their broader digital transformation journey with us." He's referring to the company's Agreement Cloud software that manages the entire lifecycle of the agreement process digitally.
The market opportunity for this suite of products is just as big as its flagship e-signature business. Many of the organizations discovering the benefits of e-signatures today will become Agreement Cloud customers of tomorrow, making this growth stock a good buy for the long term.
Shopify: Powering e-commerce for small business
Online shopping has been a go-to for many people during the last six months, and Shopify has benefited. Its e-commerce operating system makes it easy for entrepreneurs and other businesses to start and run online shops. In its most recent quarter ended June 30, the company saw a 71% increase in the number of new stores created, and revenue was up 97% on the back of an incredible 119% increase in gross merchandise volume sold on its platform. These numbers are truly amazing, but they're likely just the beginning.
Similar to DocuSign, once a customer gets hooked on Shopify's sticky ecosystem, it's hard to switch to a competitor's product, giving the company an incredible moat. The fact that the highest-ever number of merchants joined Shopify Plus in the second quarter, the company's high-end solution, bears this out.
What's most exciting for investors is that this massive move online isn't just a one-time thing. CFO Amy Shapero said on the most recent earnings call, "We believe the COVID pandemic has permanently accelerated the growth of online commerce, changing the retail landscape forever." These tailwinds and Shopify's inherent advantages will make this tech stock a winner for the next decade and beyond.
Veeva: Building a cloud platform for life sciences
Veeva has built an end-to-end software platform for life science companies to run all aspects of their business in the cloud. This focus has grown the company into a $1.2 billion annual revenue business. But its most recent quarterly results give investors further confidence that it has really just begun to tap into its market opportunity. Revenue growth for the fiscal 2021 first quarter, ended April 30, accelerated to 38% year over year, up from 34% in the fourth quarter and 25% in the prior-year period. This strong top-line growth gave management the confidence to project full-year revenue to be in the range of $1.380 billion to $1.395 billion, good for about 26% growth, and Veeva reiterated its commitment to a $3 billion revenue goal by 2025.
The company is helping life science companies address some critical needs during the pandemic. It recently announced the MyVeeva application, which will guide patients who are participating in clinical trials. In addition, its video platform integration with Zoom and Microsoft Teams will make sales communications with medical professionals easy and compliant.
As life science organizations step up to battle the coronavirus, Veeva's long-term relationship with the industry and its culture of innovation will make this a market-beating pick over the next five years.
The coronavirus is making digital transformation a priority
The coronavirus has spurred corporations to accelerate their digital transformation efforts and invest in software. Whether these investments enable businesses to do more with less or just get things done in a remote work environment, the trend is here to stay. The gains these three tech companies have seen in the past six months aren't just a temporary blip but a launching pad for future growth, making them solid long-term investments.