Published on 24 Feb 2023 on Insider Monkey via Yahoo Finance

10 Small Cap SaaS Stocks Hedge Funds Are Piling Into

In this piece, we will take a look at ten small cap SaaS stocks that hedge funds are piling into. For more SaaS stocks, head on over to 5 Small Cap SaaS Stocks Hedge Funds Are Piling Into.

While traditional sectors such as leisure, travel, and hospitality were dealt massive blows by the coronavirus pandemic, one sector that thrived was software as a service, or SaaS. This industry is made of firms that provide a software subscription to customers - whether corporate or retail - and host the software and the associated data on either their own servers or third party equipment. This lends the end user a variety of benefits as services can be globally accessed without the need to invest in hosting hardware courtesy of the Internet.

The coronavirus increased SaaS spending since companies had to make their employees work from home, and lockdowns increased the demand for digital products and services. From a business operations standpoint, firms had to migrate to virtual enterprise resource planning (ERP) systems as stay at home orders necessitated the need to access planning systems remotely. Two key reasons that fueled this migration were the low up front costs associated with SaaS and the benefits of remote access. The growing demand transformed software providers as well, with research from Deloitte revealing that firms such as Kronos, InVison, and Adobe Inc. (NASDAQ:ADBE) transforming their business operations to meet the changing trends. This enabled Adobe to add a whopping $5 billion in recurring revenues to its top line, while Kronos won big through 90% cloud bookings, 95% customer retention, and a 30% subscription growth rate.