10 pure-play cloud companies to put on your watchlist

  • Written by MarketWatch
  • Published in Economics

There are many large companies that are making a lot of money in the cloud-services industry.

But you might want to look at smaller, newer players that are producing very rapid sales growth. In the table below you can see 10 companies that have achieved sales-per-share growth of 30% to 50%. Total returns for this year are astounding — 80% in one instance.

Bessemer Venture Partners, founded in 1911, has helped many cloud companies get started. The Menlo Park, Calif -based company continues to track them after they go public and after the venture capital firm sells its shares.

Byron Deeter, a partner at BVP, created the firm’s BVP Cloud Index in 2013, with data back-tested to 2011 and weighted by market capitalization. The index includes 50 publicly traded companies that derive the majority of their sales from cloud computing products and services.

Narrowing the index criteria, Deeter said in an interview: “We define cloud as deriving the majority of its revenue from business-oriented software products, which are both delivered by customers through the cloud, and provide a cloud economic model — subscription, transaction or volume based offering to generate recurring revenue for the company.”

Cloud companies that Bessemer has recently exited include Adaptive Insights Software (acquired by Workday WDAY, -1.20%[1] ), SendGrid SEND, -3.38%[2] Intacct (acquired by Sage Group SGE, +0.22%[3] ), Twilio TWLO, -2.94%[4] Box BOX, -1.71%[5] Instructure INST, +0.55%[6] Cornerstone OnDemand CSOD, +1.86%[7] Criteo CRTO, +1.79%[8] and Eloqua (acquired by Oracle ORCL, -0.54%[9] ).

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