Scott Berg, Managing Director and Senior Research Analyst, Needham & Company,
Scott Berg, Managing Director and Senior Research Analyst, joined Needham & Company, LLC in 2015. Previously, he was Senior Research Analyst at Northland Capital Markets covering enterprise/application software.
Prior to Northland, he was Senior Research Analyst with Feltl & Company and Research Analyst/Associate with ThinkEquity, both with a focus on enterprise software.
Before his Wall Street career, Mr. Berg held a variety of internal IT management positions for 10 years. He holds an MBA in finance and a B.A. in economics from the University of Minnesota.
In this 2,911 word interview, exclusive to the Wall Street Transcript, Scott Berg picks many mid-cap tech stocks to own in 2021.
The Needham senior analyst sees the pandemic related business process changes as permanent:
“Things have changed a lot since the start of the pandemic. In software, generically, especially in enterprise software over the last year, you saw a lot of the companies I cover actually benefit from the pandemic.
They’ve seen their customers spend more on their applications, mainly because their applications will automate certain business processes. In the environment that we’re in, a lot of that automation was required to work with teams, and amid the disparate nature.
We saw business trends that were soft initially. Since the first part of the pandemic everything has really picked up over the last two or three quarters. General bookings commentary has been quite positive across my space. We see it not just in the public companies, but the private companies.
I believe the IPO opportunity for a lot of private companies that I track is going to be very significant over the next one to two years.”
Some top Needham picks for this current market have already seen big benefits:
“Two companies that had at least immediate benefit from the pandemic — one is called Bill.com (NYSE:BILL). Bill is a company that helps small and midsize businesses automate their accounts payable processes and their payment processes.
A lot of small businesses still write checks to pay their bills, even to this day. Bill’s platform will digitize that process and then make payments electronically. So in a work-from-home environment when a controller or an AP clerk doesn’t have direct access to a manager or business owner to sign a check, that solution is an immediate benefit.
The second one is a company called Five9 (NASDAQ:FIVN) that does contact center software. A lot of these companies had to spin up much larger contact centers initially for a variety of different reasons. So both of those benefited.
The Needham analyst also has some top picks for 2021:
“Now, in terms of calendar 2021, the two companies that I really like are company called Anaplan (NYSE:PLAN) and a company called Smartsheet (NYSE:SMAR). Both of their businesses were not direct beneficiaries in the first four or five months after the pandemic.
But now that these businesses have remained on, or found their solid footings, they help to address different types of business processes that are kind of broken in a work-from-home environment. As we continue to work more remotely, going forward we will in some fashion see these systems really help foster better collaboration amongst employees.”
More detail from the Needham senior analyst on Anaplan as a top pick includes the reasoning for it:
“They’re a planning software company with software used by individuals within either a finance department, a sales department, or maybe an operations department, to put together the future financial plan of a company.
Most companies will have a one-year plan, a three-year plan, and maybe a five-year plan. And this is the software that’ll actually encompass all of those financial components. It might be sales projections, it might be headcount projections, but this is what you’ll use to manage your business in those different time frames.
Half of the market still uses Excel, which is obviously not a very efficient product to bring together information from what could be hundreds of different managers within your business if we’re talking a large company.
You really need a more automated solution, like Anaplan gives. This is a technology that’s going to be more widely employed.
But at the beginning part of the pandemic, companies weren’t buying because they were effectively stuck with what they were already using. And you couldn’t make this change overnight, because there tends to be a long implementation processes.
Now, as the business environment has stabilized, we’ve seen corporate executives and Anaplan partners talk about how using these tools can be used to more effectively manage the business, especially during this immediate change in the macro economy.
And Anaplan is the tool that can help manage those real-time changes much more effectively, let alone the five-year planning. And so PLAN is my top pick for the year.”
Another pick for the new work from home environment from Needham:
“Number two would be Smartsheet. This is a company that’s in what’s considered the collaborative work management space. Some like to call it just Excel in the sky. It’s much more than that, because the product looks like an Excel spreadsheet, but it has some really powerful business process and automation functionality within it.
Companies will use it for things like project management. For example, maybe when building a new store for project management in your IT area. I’ve seen some companies that will use it for expense management areas, or within a sales operations environment. There are many uses and functionalities.
Again, it’s a platform that wasn’t used a lot, and wasn’t sold a lot during the initial stages of pandemic because customers were stuck with what they had. But now as businesses find better footing, it’s been a much better solution to fix those business processes that don’t really work in the current environment.”
Get the detailed research insights and current market moves from Scott Berg’s 2,911 word interview, exclusively found in the Wall Street Transcript, and have all the top 2021 stock picks from this Managing Director and Senior Research Analyst from Needham & Company.
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