3 Small-Cap Software Stocks Wall Street Predicts Will Rally more than 85%

The pandemic accelerated the growth of the software industry to a great extent. In addition, with the rapid adoption of advanced technologies and extended hybrid work culture due to the resurgence of COVID-19 cases, the software space is expected to witness high demand.

Advanced software solutions are becoming an integral part of most businesses. According to a ResearchAndMarkets report, the global software market is expected to grow at a CAGR of 11% by 2025.

Given this backdrop, Wall Street analysts expect small-cap software stocks AvePoint, Inc. (AVPT), Veritone, Inc. (VERI), and Upland Software, Inc. (UPLD) to rally more than 85% in the near term.

AvePoint, Inc. (AVPT)

AVPT provides Microsoft 365 data management solutions worldwide. It offers a suite of SaaS solutions and delivers cloud solutions for Office 365, Salesforce, Dynamics 365, and hybrid/on-prem products. Its market capitalization is $1.15 billion.

On November 15, 2021, Dr. Tianyi Jiang (TJ), CEO and Co-Founder, AVPT, said, "With most companies still in the early stages of their SaaS optimization and multi-cloud shifts, there is a massive market opportunity for AvePoint to manage and protect digital collaboration data on a recurring basis that will only increase as companies' SaaS operations become more mature and complex."

AVPT’s SaaS revenue increased 59% year-over-year to $22.41 million for the third quarter ended September 30, 2021. Its total revenue came in at $53.93 million, up 35.5% year-over-year. Also, its net loss came in at $9.76 million, compared to $12.19 million in the year-ago period. Moreover, its loss per share came in at $0.05, compared to $0.20 in the previous period.

Analysts expect AVPT’s revenue to grow 30.4% to $255.23 million in fiscal 2022. The stock closed yesterday’s trading session at $6.38. Wall Street analysts expect the stock to hit $13.00 in the near term, which indicates a potential upside of 103.8%.

Veritone, Inc. (VERI)

Together with its subsidiaries, VERI provides artificial intelligence computing solutions in the United States and the United Kingdom. It serves organizations in both commercial and regulated sectors. Its market capitalization is $686.72 million.

On December 7, 2021, VERI announced that it has partnered with London-based Vixen Labs, Europe’s leading voice agency. Veritone Senior Vice President Sean King said, “This is truly the perfect pairing of two companies with exceptional complementary strengths that will provide customers tremendous competitive advantages.”

For the third quarter ended September 30, 2021, VERI’s revenue increased 44.1% year-over-year to $22.66 million. The company’s total assets came in at $291.2 million for the period ended September 30, 2021, compared to $177.65 million for the period ended December 31, 2020. Also, its goodwill came in at $28 million, compared to $6.9 million for the same period.

VERI’s revenue is expected to be $105.02 million in fiscal 2021, representing an 82% year-over-year rise. The company’s EPS is expected to increase 1,325% year-over-year to $0.49 in fiscal 2022. It surpassed Street EPS estimates in each of the trailing four quarters. Over the past six months, the stock has gained 2.1% to close yesterday’s session at $19.69. Wall Street analysts expect the stock to hit $45.50 in the near term, which indicates a potential upside of 131.1%.

Upland Software, Inc. (UPLD)

UPLD provides cloud-based enterprise work management software in the United States, the United Kingdom, Canada, and internationally. It helps global businesses accelerate digital transformation with a powerful cloud software library. Its market capitalization is $554.06 million.

On November 3, 2021, Jack McDonald, UPLD’s chairman & CEO, said, “We remain determined to improve our sales performance and note that our focus throughout this year on securing multi-year customer renewals and expansions means a higher percentage of our revenue is now contracted through 2022, which supports improved net dollar retention rates next year.”

UPLD’s total revenue increased 2.5% year-over-year to $76.05 million for the fiscal third quarter ended September 30, 2021. The company’s net loss came in at $11.02 million compared to $11.31 million in the year-ago period. Its loss per share came in at $0.36, compared to $0.42 in the previous period.

For fiscal 2021, analysts expect UPLD’s revenue to be $301.7 million, representing a 3.4% year-over-year rise. The company’s EPS is expected to increase 10% per annum for the next five years. It surpassed Street EPS estimates in three of the trailing four quarters. The stock closed yesterday’s session at $18.15. Wall Street analysts expect the stock to hit $34.33 in the near term, which indicates a potential upside of 89.2%.

AVPT shares were trading at $6.24 per share on Friday afternoon, down $0.14 (-2.19%). Year-to-date, AVPT has declined -0.79%, versus a -1.64% rise in the benchmark S&P 500 index during the same period.

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.

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