Technology

4 Tech Companies That Small and Medium Business Rely On the Most

Lee Jackson

Published: July 19, 2018 8:05 am

Last Updated: January 11, 2020 8:48 pm

Despite the massive size of some of America’s largest companies, the great bulk of workers in the nation are employed by small and medium-sized businesses. In fact, large businesses only employ about 38% of the private sector workforce, while small businesses employ 53% of the workforce. In addition, over 99% of employing organizations are small businesses, and more than 95% of these businesses have fewer than 10 employees.

To keep up in a fast-paced and changing business climate, many of these businesses have turned to digital mediums for advertising, accounting software and front office/online presence tools. In a new Jefferies research report, the firm’s internet team decided to survey 1,000 small and medium businesses to see which digital medium is most preferred.

Four top companies showed up prominently and all are expected to continue leading the pack in their respective categories.

Advertising

Facebook Inc. (NASDAQ: FB) stock has been volatile recently after the disclosure of user data being compromised, but the upward trend has continued. The huge social media leader is the largest social network with over 2.0 billion monthly active users and over 1.4 billion daily active users. The company generates revenue from advertising and from payments, with over 95% of revenue from advertising. It generates close to 50% of revenues in the United States and Canada and is expanding rapidly in international markets.

Its solutions also include Instagram, a mobile application that enables people to take photos or videos, customize them with filter effects, and share them with friends and followers in a photo feed or send them directly to friends; Messenger, a messaging application for mobile and web on various platforms and devices, which enable people to reach others instantly, as well as enable businesses to engage with customers; and WhatsApp Messenger, a mobile messaging application.

A stunning 60% of small businesses surveyed said they use the company’s advertising platform in some way for their businesses. Alphabet Inc. (NASDAQ: GOOGL) came in second with 45% of the respondents using the search giant.

The 52-week trading range for Facebook is $149.02 to $210.46. The Wall Street consensus price target for the shares is $229.86. The stock closed trading on Wednesday at $209.36 per share.

Accounting Software

Intuit Inc. (NASDAQ: INTU) has been on a roll this year and hits all the metrics in the technology sector for accounting needs. The company is a provider of business and financial management solutions for small and medium-sized businesses, financial institutions, consumers and accounting professionals. Products and services include TurboTax, QuickBooks, Quicken, small business financial management and payroll processing, personal finance and tax preparation and filing and online banking services through its Digital Insight acquisition. Intuit also offers products on a software as a service (SaaS) platform across all its business divisions.

Intuit has served small businesses and accountants with QuickBooks for more than 20 years. The company was an early innovator in cloud accounting when it first launched QuickBooks Online in 2001. QuickBooks Online has more than a million paying subscribers, cementing its market leadership as small businesses shift to the cloud.

The analysts note in the report that 40% of respondents use either Quickbooks Online or Quickbooks Desktops, while 35% use Excel or manual paper accounting. They point out that this highlights the underlying opportunity for the company going forward.

Intuit investors receive a 0.72% dividend. The 52-week trading range is $133.29 to $216.99, and the consensus price objective is $196.48. The stock closed well above that level on Wednesday at $218.31.

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Front Office and Online Presence Tools

GoDaddy Inc. (NYSE: GDDY) is probably the most well-known for constructing websites. This technology provider to small businesses, Web design professionals and individuals delivers cloud-based products and personalized customer care. It operates a domain marketplace, where its customers can find the digital real estate that matches their idea. It provides website building, hosting and security tools to help customers construct and protect online presence.

GoDaddy provides applications that enable connecting to customers and managing businesses. It also provides search, discovery and recommendation tools, as well as a selection of domain names for ventures. It provides productivity tools, such as domain-specific email, online storage, invoicing, bookkeeping and payment solutions to run ventures, as well as marketing products.

Jefferies noted that while just 17% of respondents were using the GoDaddy panel, more than 90% of them were satisfied. Just 23% of respondents have a website, which again underscores the potential untapped opportunity within the space.

The shares have traded in a 52-week range of $40.78 to $78.38, and the consensus price objective is $76.60. But the shares closed at $78.46 on Wednesday.

Four top companies that small and medium businesses are utilizing to stay competitive in today’s tech-savvy and fast-paced world. The opportunity for all these companies to gain an even higher share of paying customers looks open-ended, which means outstanding growth opportunities could lay ahead for all four.