Last year, the coronavirus pandemic reshaped the world, accelerating the adoption of certain trends and technologies like cloud computing, e-commerce, and videoconferencing. More broadly, the pandemic sparked a massive digital transformation (DX) that will continue to impact virtually every industry in the coming years.
In fact, enterprises will spend $6.3 trillion on DX initiatives between 2022 and 2024, according to the International Data Corp. (IDC). That creates a substantial opportunity for investors, and companies like Globant (GLOB 2.99%) and PagerDuty (PD +2.83%) are poised to benefit, as both were built to thrive in a digital-first world.
Here's what you should know.
Image source: Getty Images.
1. Globant
Globant specializes in IT consulting and product engineering. Its portfolio consists of over 30 different studios, each of which represents an area of deep expertise. That includes emerging trends like blockchain and big data, as well as established technologies like digital sales and marketing. Collectively, Globant uses that expertise to help organizations design and implement new products, and achieve their digital transformation initiatives.
To supplement its core services, Globant also provides a range of proprietary software. For instance, Navigate is a process mining tool that uses artificial intelligence to analyze workflow efficiency and identify bottlenecks across an organization. And FluentLab is a framework that uses artificial intelligence to create conversational applications.
Despite intense competition, the IDC has recognized Globant as a leader in customer experience improvement, and the company has won big customers like Alphabet's Google and Walt Disney. To that end, Globant has delivered strong sales growth over the last couple of years.
|
Metric |
Q3 2019 |
Q3 2021 |
CAGR |
|---|---|---|---|
|
Revenue (TTM) |
$615.2 million |
$1.2 billion |
37% |
Source: YCharts. TTM = trailing-12-months. CAGR = compound annual growth rate.
Recently, Globant launched a group of "reinvention studios" aimed at accelerating digital transformation in industries that are undergoing widespread disruption. For instance, its media and entertainment studio offers solutions that help clients build, launch, and monetize premium streaming services. And its travel and hospitality studio blends marketing, bookings, and loyalty programs to create a frictionless experience for guests.
Collectively, Globant puts its market opportunity at $154 billion in 2022, and management is executing on a smart growth strategy. To that end, as digital transformation continues to gain momentum, Globant and its shareholders should benefit. That's why this stock looks like a smart long-term investment.
2. PagerDuty
Digital transformation is just the beginning. Once an organization implements new digital solutions, keeping those technologies up and running is critical. Something as a simple as a website outage could cost millions in revenue, and a prolonged problem could permanently damage a company's reputation. Fortunately, PagerDuty can help.
Its platform sits at the heart of the corporate IT ecosystem, collecting data from virtually every software-enabled system. That includes performance monitoring tools like Datadog, communications platforms like Zoom, and customer service software like Salesforce. Then, using those digital signals, PagerDuty leans on artificial intelligence to predict and automatically prevent issues like website outages or system failures. Or if auto-remediation isn't an option, PagerDuty triggers a human response by alerting the appropriate teams and provisioning them with contextual information.
That differentiates PagerDuty from traditional incident response solutions, which involve slow manual identification, triage, and remediation, often allowing outages to drag on for hours or days. By comparison, PagerDuty empowers organizations to react in real-time, making it possible to resolve issues in minutes.
Not surprisingly, that value proposition has translated into solid top-line growth.
|
Metric |
Q2 2020 |
Q2 2022 |
CAGR |
|---|---|---|---|
|
Revenue (TTM) |
$154.3 million |
$262.2 million |
30% |
Source: Ycharts. TTM = trailing-12-months. CAGR = compound annual growth rate. Note: Q3 2022 ended Oct. 31, 2021.
Of particular note, PagerDuty posted a retention rate of 124% in the most recent quarter, up from 119% last year, indicating that the average customer spent 24% more over the last 12 months. Also noteworthy, PagerDuty has seen strong demand from larger customers, as it currently serves 65% of the Fortune 100, and 45% of the Fortune 500. That includes well-known brands like Netflix and Nvidia.
Looking ahead, management puts its addressable market at $36 billion, leaving plenty of room for future growth. That's why this stock looks like a smart buy for long-term investors.
