Zacks Industry Outlook Unity Software, nCino and Digital Turbine

Industry Overview - The Zacks Internet Software industry is experiencing growth due to accelerated demand for digital transformation and a shift to cloud solutions, particularly Software as a Service (SaaS) [1][2] - The industry is benefiting from the increasing deployment of AI, generative AI, and the proliferation of Augmented and Virtual Reality devices, alongside rising cybersecurity application demand due to sophisticated cyber-attacks [2] Key Trends - The adoption of SaaS is growing, driven by the need for flexible and cost-effective application delivery, which reduces deployment time compared to legacy systems [5][6] - The pay-as-you-go model is gaining traction, allowing users to scale offerings based on needs, while the subscription-based model ensures recurring revenues [8] - The ongoing transition to cloud environments is creating opportunities, particularly in securing cloud platforms and increasing demand for performance management monitoring tools [9] Industry Performance - The Zacks Internet Software industry holds a Zacks Industry Rank of 83, placing it in the top 34% of over 250 Zacks industries, indicating bright near-term prospects [10][11] - The industry's earnings estimates for 2025 have increased by 11.8% since June 30, 2024, reflecting a positive earnings outlook [12] Comparative Returns - Over the past year, the Zacks Internet Software industry has returned 16.8%, lagging behind the S&P 500's 17.1% but outperforming the broader Zacks Computer and Technology sector, which appreciated by 15.2% [14] Current Valuation - The industry is currently trading at a trailing 12-month price-to-sales (P/S) ratio of 4.74X, compared to the S&P 500's 5.18X and the sector's 6.15X [15] Company Highlights - Unity Software: A Zacks Rank 1 company, benefiting from strong adoption of its game engine, with 70% of the top 1,000 mobile games made using its platform. Shares have appreciated 14.1% year-to-date, with a narrowed loss estimate for 2025 to $1.22 per share [16][18] - nCino: Also a Zacks Rank 1 company, experiencing strong sales momentum and expansion in key markets. Despite a 6.8% decline in shares year-to-date, the earnings estimate for 2025 remains at 72 cents per share [18][21] - Digital Turbine: Another Zacks Rank 1 company, expecting stable device sales in 2025, with shares skyrocketing 102.9% year-to-date and a fiscal 2025 earnings estimate of 30 cents per share [22][23]