- Docusign (DOCU): Is riding on strong organic growth with DocuSign Agreement Cloud.
- Fiverr (FVRR): The keystone of the gig economy has recently expanded its active buyer base significantly,
- Twilio (TWLO): Continues to scale up its cloud infrastructure.
Despite a decidedly positive outlook in earnings reports, popular tech stocks have seen deep pullbacks off their highs so far this year. Fears that the pandemic recovery was fully priced in, concerns about rising inflation and higher interest rates cast a dark cloud over technology shares. In addition, the war in Ukraine further increased volatility in the stock market, creating strong headwinds for already struggling tech stocks.
The tech-heavy Nasdaq 100 is down 8.6% year-to-date (YTD) versus a 4% dip for the S&P 500. Analyst point out the tech sector seems to be more concerned about resilience than in the previous two years.
Recent data from IBR research highlights that 2022 should see many tech players shift their focus from growth. Instead, they will possibly consolidate and optimize existing processes. Therefore, a number of tech stocks will likely catch investors’ who want to include them in long-term portfolios.
With that information, here are 3 beaten-down tech stocks with solid growth prospects that could roar back in the coming months.
Our first stock, DocuSign (NASDAQ:DOCU), allows organizations to manage electronic agreements by automating how they prepare, sign, and act upon legal documents. The company offers DocuSign Agreement Cloud, a software suite that automates legal duties, making them more secure.
DocuSign announced fourth-quarter 2021 results on March 10. Revenue increased 35% year-over-year (YOY) to $581 million. Net income per diluted share came in at 48 cents, up from 37 cents in the prior-year quarter. Free cash flow soared to $70 million, up from $44 million a year ago. Cash and equivalents ended the period at $898 million.
The group’s net dollar retention stood at 119%, highlighting strong organic growth. Investors were pleased to see that large enterprise and commercial customers accounted for 88% of Q4 revenue and recorded 36% YOY growth in 2021.
DOCU stock lost almost 46% over the past year. Shares are trading at 57.8 times forward earnings and 10.4 times trailing sales. Put another way, despite the recent decline, valuation is still on the frothy side. Meanwhile, the 12-month median price forecast for DOCU stock stands at $95.
Fiverr International (FVRR)
Next up on our list is Fiverr International (NYSE:FVRR). It operates a growing platform where individuals advertise freelancing services for various skills. The company has become a keystone of the gig economy, especially during the pandemic. It now has a catalog of over 550 categories like data analytics, web development, or digital marketing.
Fiverr issued Q4 2021 results on Feb. 17. Revenue soared 43% YOY to $80 million. Adjusted net income came in at $9.2 million, or 22 cents per diluted share, compared to $4.8 million a year ago. Cash and equivalents ended the period at $74 million.
The platform’s active buyer base has expanded 23% to 4.2 million during the fourth quarter, while average buyer spending rose by 18% to $242. Analyts note that the company sees the market’s potential worth at $115 billion. Management is forecasting topline growth between 25% and 27%.
FVRR stock is down 64% over the past year. Shares are trading at just 9 times trailing sales. The 12-month median price forecast for FVRR stock is $100.
Tech Stocks: Twilio (TWLO)
Our final tech stock, Twilio (NYSE:TWLO), provides a cloud communications platform that enables developers to build, scale, and operate customer engagement within software applications. The platform also includes pre-built applications to enhance personalized customer communications.
Twilio released Q4 2021 results on Feb. 9. Revenue surged 54% YOY to $843 million. Adjusted net loss came in at $27.2 million, or 20 cents loss per diluted share, compared to an adjusted net income of $12.8 million a year ago. Cash and short-term investments ended the year at $5.4 billion.
In 2021, Twilio grew its customer base by 16% to 256,000 active accounts. In addition, the average customer spent 31% more on its sticky platform. Management reiterated its long-term target of growing by more than 30% annually over the following four years.
TWLO stock has lost almost 50% over the past 12 months. Shares are trading at 9.9 times trailing sales. The 12-month median price forecast for TWLO stock stands at $306.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.