One externality of the COVID-19 pandemic is that many businesses could remain remote, but what will this mean for these 3 companies?
Nov. 28, 2020
Atlassian Corporation (NASDAQ: TEAM), DocuSign (NASDAQ: DOCU), and Chegg (NYSE: CHGG) are three companies I think will benefit from the mass migration to remote working, even after the pandemic passes. Companies like Microsoft, Google, Netflix, Salesforce, and Shopify have announced that working remotely is here to stay with more likely to follow — good news for these 3 companies.
You might have used Confluence, Jira, Bitbucket, or Trello; some of Atlassian’s most popular products. If not, you probably use a website that uses Atlassian’s products. Slack, Twitter, Bloomberg, and Zoom are examples of companies that use Atlassian’s products to make their platform more user friendly.
The Software-as-a-Service (SaaS) company is busy setting up a moat to assure long-term dominance, and it’s working. Companies are quickly coming to a reliance on Atlassian’s products which give customers a wide range of services such as team planning, project tracking, and code and document creation and sharing. This, coupled with high switching costs after the users have gained reliance, makes users loyal to Atlassian’s products. High costs of re-training employees on now collaborative software as well as the high cost (in both time and capital) of migrating all data to new software go in line with Atlassian’s plan to assert long-term market dominance.
Handwritten signatures became standard practice in the 17th century. It’s about time we’re starting to see some innovation here — and it’s DocuSign who is leading this innovation. DocuSign is taking advantage of recent technological advancements and applying this to the increasingly important way we sign documents. COVID-19 has shown us that most business can now be done from any distance. DocuSign facilitates much of this business, and as the world realizes that those costly flights across the world were not absolutely necessary, they will turn to the likes of DocuSign to handle encrypted signatures. This year, DocuSign added 88,000 customers, bringing its total paying customers to 749,000 with revenue of $342 million, up 45% year-over-year (YoY). With its stock trading at 20% lower than its September 2020 high, it’s a great time to buy if you see the encrypted signatures industry being even bigger in 10 years.
Chegg has been paving the way for education technology and online learning since 2005. Similar to DocuSign, the pandemic has shown us that online learning can work well thanks to today’s technology all the while benefiting students and providers with lower costs. The company supplies users with textbook rentals, tutors, writing help, and apps such as Mathway. Chegg subscribers have increased 69% YoY and the company is expecting revenues of between $605 million and $615 million, despite Wall Street projecting $551 million.
Chegg plans on keeping retention high by investing in more content as well as different language supports, investing in its infrastructure, growing its community college base, and targeting the upskilling market — the last 2 of which have faced growing popularity since the pandemic. Education has changed for the better almost overnight, and Chegg is set on delivering this new-era of education to everyone in an affordable and scalable manner, whilst on-demand.
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