Industry Overview - The Zacks Internet - Delivery Services industry includes companies providing services through Internet-based platforms, such as food delivery, online travel booking, and web hosting [2] - Growth-stage companies in this industry are increasing spending on R&D and sales & marketing, which may hinder short-term profitability [2] Growth Drivers - The rise in smartphone usage and improved Internet access are creating significant opportunities for the industry, with 4G and emerging 5G technology enhancing user experiences [3] - Shifting consumer preferences towards convenience and online services are expected to benefit the industry, particularly in food ordering and travel booking [4] - Technological advancements, such as smart routing algorithms and real-time GPS tracking, are improving delivery efficiency and customer experience [5] Challenges - Persistent macroeconomic uncertainties, inflation, and high interest rates pose challenges to the industry [1] - Higher upfront costs associated with market expansion may negatively impact profitability, especially as competition intensifies from major tech companies like Amazon and Alphabet [7] - The potential fallout from tariff wars could indirectly affect revenue growth and margins due to reduced spending from small businesses and startups [6] Market Performance - The Zacks Internet - Delivery Services industry has outperformed the S&P 500 and the broader Computer and Technology sector, rising 23.2% over the past year compared to 11.7% and 11% respectively [11] - The industry currently holds a Zacks Industry Rank of 55, placing it in the top 22% of approximately 250 Zacks industries, indicating solid near-term prospects [9][10] Valuation - The industry is trading at a forward 12-month price-to-sales (P/S) ratio of 1.81X, significantly lower than the S&P 500's 5.23X and the sector's 6.62X [14] Company Highlights - **Vipshop Holdings**: An online discount retailer in China, benefiting from a growing online shopping trend and a focus on high-margin apparel businesses. The Zacks Consensus Estimate for current-year earnings is $2.49 per share [19][21] - **QuinStreet**: A provider of online marketing services, well-positioned to capitalize on the shift to online business models. The Zacks Consensus Estimate for fiscal 2026 earnings is $1.05 per share [24][25] - **GoDaddy**: An Internet domain registrar and web hosting company, experiencing growth in its Applications & Commerce business. The Zacks Consensus Estimate for 2025 earnings is $5.92 per share [28][30] - **Asure Software**: A cloud computing firm focused on human capital management solutions, with a Zacks Consensus Estimate for 2025 earnings of 90 cents per share [33][34]

Industry Overview - The Zacks Internet - Delivery Services industry is facing challenges due to macroeconomic uncertainty, inflation, and high interest rates, which are affecting the near-term outlook [1] - Escalating tariff tensions are threatening to squeeze both consumers and businesses, potentially leading to reduced discretionary and enterprise spending [1] - Companies in the industry are experiencing increased costs due to aggressive hiring and heavy investments in sales and marketing [1][8] - The industry primarily includes companies offering services via Internet-based platforms, such as food delivery, online travel booking, and web hosting [3] Growth Opportunities - Industry participants like GoDaddy, QuinStreet, and Asure Software are well-positioned for growth due to their adaptation to changing consumer preferences [2] - The rise of smartphones and improved Internet access are creating significant opportunities for the industry, with 4G and emerging 5G technology enhancing user experiences [4] - The shift in consumer preferences towards online services, particularly in food ordering and travel booking, is expected to benefit industry players [5] - Technological advancements, such as smart routing algorithms and real-time GPS tracking, are improving customer experiences and operational efficiencies [6] Challenges - The industry is facing risks from tariff wars, which can indirectly impact revenue growth and margins due to reduced spending from small businesses and startups [7] - Higher upfront costs associated with expansion strategies may hurt profitability, especially in the face of competition from larger tech companies like Amazon and Alphabet [8][9] - The industry's Zacks Industry Rank is 209, placing it in the bottom 15% of nearly 250 Zacks industries, indicating dim near-term prospects [10][11] Performance Metrics - The Zacks Internet - Delivery Services industry has outperformed the S&P 500 and the broader Computer and Technology sector over the past year, rising 17.7% compared to declines of 2.2% and 7.6%, respectively [15] - The industry is currently trading at a forward 12-month price-to-sales (P/S) ratio of 1.63X, significantly lower than the S&P 500's 4.37X and the sector's 4.92X [18] Company Highlights - **GoDaddy**: Engaged in domain registration and web hosting, benefiting from strong momentum in its Applications & Commerce business and expanding global footprint [23][24] - **QuinStreet**: A provider of online direct marketing services, positioned to capitalize on the shift to online business models and increasing ad spending [28][30] - **Asure Software**: Focused on human capital management solutions, driving growth through new client additions and innovation in its offerings [33][34]