Investing in growth stocks is one of the best methods to build your wealth.
Luckily, the US market offers a myriad of opportunities to purchase promising growth stocks to grow your investment portfolio.
Software-as-a-service (SaaS) companies are one category of growth stocks that utilise cloud computing to provide a desired service to their customers.
Such companies have the potential to grow quickly as their platform draws in more customers and keeps them loyal through high switching costs.
Here are five attractive US SaaS companies that you can add to your buy watchlist.
Hubspot (NYSE: HUBS)
Hubspot operates a customer platform that helps businesses to connect and grow.
The software provider’s platform has artificial-intelligence (AI) powered engagement hubs, customer relationship management (CRM) software, along with a connected ecosystem with more than 1,500 app marketplace integrations.
Hubspot reported a strong set of earnings for the first nine months of 2024 (9M 2024).
Total revenue rose 21.2% year on year to US$1.9 billion while gross profit climbed 22.2% year on year to US$1.6 billion.
Gross margin came in slightly higher at 84.9% for 9M 2024 compared with 84.2% in the previous corresponding period.
The business also generated a positive free cash flow of US$312.5 million, up 81.3% year on year.
Hubspot saw strong customer growth for the third quarter (3Q 2024), rising by 23% year on year to 238,000.
The company believes it has penetrated less than 10% across all its product categories, and that it still has significant opportunities to grow its revenue with a total addressable market (TAM) of US$128 billion by 2029.
Adobe (NASDAQ: ADBE)
Adobe provides a subscription service to its cloud platform and provides a myriad of services such as Creative Cloud, Experience Cloud, and Document Cloud.
These software help in graphic design, video editing, and web development, among others.
For its fiscal 2024 (FY2024) ending 30 November 2024, Adobe reported a record set of earnings.
Revenue increased by 10.8% year on year to US$21.5 billion while operating profit inched up 1.4% year on year to US$6.7 billion.
Net profit edged up 2.4% year on year to US$5.6 billion.
Adobe generated free cash flow of US$7.9 billion for FY2024, up 13.4% year on year.
Its remaining performance obligations (RPO) also hit a record at US$20 billion, representing growth of 16% year on year.
Last October, Adobe released GenStudio for performance marketing by tapping on generative AI to provide marketing teams with deep insights.
In the same month, the company also introduced new innovations for both Photoshop and Illustrator to help with graphic design and creative imaging.
Veeva Systems (NYSE: VEEV)
Veeva provides cloud software catered to the life sciences industry.
The company serves more than 1,000 customers ranging from large pharmaceutical companies to emerging biotechnology businesses.
Veeva delivered a strong performance for the first nine months of fiscal 2025 (9M FY2025) ending 31 October 2024.
Revenue rose 17% year on year to US$2 billion while operating profit soared 71.1% year on year to US$503 million.
Net profit came in at US$518.5 million, up 37.1% year on year.
Free cash flow jumped 20% year on year to US$1 billion.
Like Adobe, Veeva is also innovating to provide a better suite of services to its customers.
Last month, the company released Vault CRM Suite, a CRM system for the life sciences industry.
During last year’s Investor Day session, management estimated that the company’s TAM stood at US$20 billion, of which Veeva has around a 14% market share.
With the biopharma and medical technology industry worth more than US$2 trillion, there are ample opportunities for further growth.
Fastly (NYSE: FSLY)
Fastly’s edge platform provides brands with a better online performance in terms of site performance while also enhancing security and innovation.
The company’s platform allows apps and websites to save costs and push themselves out to market faster.
Fastly saw its revenue rise 9.5% year on year to US$403 million for 9M 2024.
Gross profit increased by almost 16% year on year to US$220.9 million, with gross margin improving from 51.8% to 54.8%.
Total customers stood at 3,638 at the end of 3Q 2024, up from 3,295 in the previous quarter (2Q 2024).
RPO inched up 6% quarter on quarter to US$235 million.
Last December, the company announced the general availability of Fastly AI Accelerator to deliver 9x faster response times.
Fastly Support Portal was also introduced that allowed customers to navigate across Control Panel, WAF Console, and Support Portal.
Okta (NASDAQ: OKTA)
Okta is an identity management company operating a cloud platform to help organisations manage online user access and privileges.
Okta saw its revenue for 9M FY2025 improve by 16.3% year on year to US$1.9 billion.
Gross profit increased by 20.1% year on year to US$1.5 billion, with gross margin improving from 73.7% to 76.1%.
Free cash flow climbed 38.1% year on year to US$446 million.
RPO rose 19% year on year to US$3.66 billion.
Management believes that its TAM is around US$80 billion, of which Okta has just a small slice.
The business has multiple growth vectors it is working on such as landing and expanding in large enterprises and international expansion.
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Disclosure: Royston Yang owns shares of Adobe.