SailPoint and Appian Are Digital Transformation Leaders
Digital transformation winners are hard to come by, but I want to talk about two firms that need to be considered by all investors: SailPoint Technologies Holdings, Inc. (NYSE: SAIL) and Appian Corp. (Nasdaq: APPN).
And like many digital winners, these software companies are maximizing competitive advantages to beat out competition.
SailPoint Technologies makes business-to-business identity software. Its tools help enterprises authenticate users and grant appropriate privileges. In the past, this mostly involved determining what employees got what access. However, authentication in the digital transformation era means granting access to contractors, supply chain associates and, more recently, software bots.
That last category, Robotic Process Automation (RPA), is a big new opportunity for SailPoint.
Many companies are adding RPA as a key part of their digital transformation strategies. When online customers request a call back, behind the scenes, a software bot is authenticating the user, filling out logs, accessing databases and sending out an email to survey the customer’s experience. All of these processes occur seamlessly within seconds. They also involve access to numerous secure databases.
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SailPoint is building a new business virtually authenticating that access.
The Austin, Texas-based firm reported third-quarter financial results on Nov. 5. Powered by strong digital growth, sales surged to $94 million, up 36% from a year ago.
The stock trades at 13 times sales for a $4.8 billion market capitalization.
For the full year, managers boosted revenue expectations to approximately $356 million.
Now, on to Appian. They operate in a business segment similar to RPA, only several magnitudes more powerful. Its software allows enterprises to quickly build and automate millions of processes with low code building blocks.
The firm’s growth is a direct response to enterprises feeling the heat from digital disruptors like Uber Technologies, Inc. (NYSE: UBER). These innovators figured out new ways to bring personalized experiences to customers by harnessing their data. Large enterprises were threatened and immediately started making large investments to replicate those experiences. That business quickly accelerated.
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Recently, the Virginia-based company has started to work more with government clients. Appian announced a strategic partnership in with Deloitte in March to modernize public sector workflows. And the company began working with Accenture plc (NYSE: ACN) in December.
Shares trade at 38 times sales for a market capitalization of $10.9 billion. After reaching $218 in November, the stock has pulled back to $158.
Savvy investors should use weakness as buying opportunities for both of these picks.
Best wishes,
Jon D. Markman
