Blackline (NASDAQ: BL) and Autodesk (NASDAQ: ADSK), two of the lesser-known names in tech, represent safe harbors in troubled times. Amongst other things, their strength lies in their position, providing software solutions across a variety of sectors, strong brand-equity, and liquidity.
Currently valued at $51 billion, Autodesk is broadly regarded as being without a peer in the wider market for design and modeling software for a diverse array of industries including construction, engineering, and entertainment. Given these sectors’ reliance upon technological tools, such a diverse client-base puts Autodesk in a very safe position; if one sector lags, others can make up the shortfall, or at least keep things ticking over. Some of their products like AutoCAD are household names in their sectors. All in all, this approach and the brand capital they command put them in a very strong position, in spite of market headwinds.
Given that the last (and longest in history) bull market just ended, it is easy to take a look back and see how this stock performed. In the six months from September 11 to March 11, the stock fell slightly. However, this belies the fact that the stock experienced massive growth over the winter, which was effectively erased in the March rout. What is interesting is that since the turn to a bear market, the stock rebounded, putting back on some of its winter weight so to speak as investors realize just how indispensable Autodesk’s stock is. And with record headline revenues reported in 2019 of $2.57 billion, this should not come as a huge surprise.
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Blackline is a provider of cloud-based finance and accounting solutions, providing services for companies as diverse as Google (NASDAQ: GOOGL), Coca-Cola (NYSE: KO) & Under Armour (NYSE: UAA). This degree of diversification in terms of clients, if not in terms of products, would seem to mirror what we see on the side of Autodesk. In the six months leading up to the end of the bull market on March 11th, Blackline shares gained 22.24%, a combination of a very solid track-record and impressive Q4 results. The company’s full-year revenue grew 27% in 2019 to $289 million.
The company’s approach is to aggressively target the middle of the market — companies with revenues of $50 million to $500 million — they still have a lot of market to get through before risking saturation, with an estimated $18 billion target market.. This should be encouraging to future investors, especially given their impressive retention rates, 108% dollar-based net revenue retention in 2018. Blackline’s cloud platform is scalable, and it can be implemented quickly, meaning that they will appeal to dynamically growing companies of this size who have yet to automate many of their accounting functions.
During the sharp declines we saw in March, the stock was affected. But as with Autodesk, most of that share price has since recovered and is on a run as smart investors seek stability in the midst of widespread uncertainty.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in companies mentioned above. Read our full disclosure policy here.
Contributing Writer at MyWallSt
Ronan is an admirer of companies like Patagonia, who combine style with functionality, and a pioneering approach to mitigating their impact of society and the natural world.