As the artificial intelligence craze evolves, driving up growth for chipmakers like Broadcom and Nvidia , investors should also consider software companies seeing strong fundamentals despite high interest rates. Canaccord Genuity ran a screen of about 147 software companies, and only four had revenue growth of 25% or more forecast for the next 12 months and at least 50% incremental free-cash flow margins over the trailing 12 months.
com had a trailing incremental FCF margin of 91% and projected revenue growth of 28%. Canaccord cited high non-GAAP gross margins, durable growth and healthy FCF leverage over the trailing 12 months as drivers of Monday's "best-in-class" incremental FCF. The stock today trades at a 9.3 multiple of 2025 enterprise value to revenue and 38 times enterprise value to FCF, Canaccord said, and is higher by 30% in 2024.
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