The future of work theme evolved in 2020. It accelerated as the pandemic forced organisations to utilize technology in order to sustain operations with employees working from home.
Several sub-themes are continuing to see strong growth inside of this much broader theme. Examples include the gig economy — recently featured in this article — and collaboration software — considered in this article.
This digital transformation is represented across the components of the JK FutureOfWork Signature Sharebasket, available exclusively through CMC Markets. Although there was an acceleration in 2020, we are still in early innings for many of the companies that are disrupting legacy software providers and supporting the massive knowledge worker economy.
COVID-19 has remained a headwind for many companies looking to return to normal, with additional lockdowns in Europe and the vaccine rollout in the US not far from expectations. As such, the future of work theme continues to evolve and is unlikely to reverse even when there is a broader return to normal.
Many organisations have already moved to allow employees to work from home permanently and are seeing a number of cost advantages and worker efficiency returns. Companies are going to continue to invest heavily in technology to avoid further disruptions in the future.
Several recent developments have affected the JK FutureOfWork Signature Sharebasket’s key components. We have seen cyber-security stocks — represented mainly by CrowdStrike [CRWD], Palo Alto [PANW], Z-Scaler [ZS], Okta [OKTA] and Qualys [QLYS] — rally after the SolarWinds [SWI] hack made headlines and left a lot of companies vulnerable. There will be a continued push to Zero Trust and other security software solutions offered by the names in this basket.
In the collaboration software sub-theme, Slack [WORK] was acquired by Salesforce [CRM] in a $27.7bn deal in December. M&A has remained active in this exciting group and two of the private names highlighted in our December article have been acquired in recent months. Adobe [ADBE] acquired Workfront for $1.5bn in November, while Citrix [CTXS] acquired Wrike for $2.25bn earlier this month.
Andrew Filev, Wrike’s CEO, commented on the deal: “Wrike and Citrix share [a] common vision when it comes to the future work, which provides [a] very strong foundation for complementary product strategy. Our cloud solutions provide [a] digital workspace experience that enables teams to access the resources they need to collaborate in the most effective way across any device allocation. Not only will the combined company be positioned to deliver the future work, but as part of this, we'll also be able to create unique opportunities to reach new users and unlock new revenue streams.”
David Henshall, CEO of Citrix Systems, later commented with great insight: “And so I think among the top priorities of companies around the world, and you hear this a lot, is really figuring out what work is going to look like once we get into this post-pandemic period. Create an environment, of course, for [companies] that allows them to drive the highest level of productivity out of their teams around the world. And so one thing that's super clear is that this hybrid or distributed work model that we've all seen over the last nine months is really here to stay. It's generated a tremendous amount of benefits, and companies are really embracing this as the go-forward.”
"This hybrid or distributed work model that we've all seen over the last nine months is really here to stay." - David Henchall, Citrix Systems' CEO
We will be watching upcoming reports from Microsoft [MSFT], ServiceNow [NOW] and Atlassian [TEAM] this month and pay attention to management commentary. Looking ahead, many of these other names report later in February and early March.
Asana [ASAN] reported stellar numbers in early December with revenues growing 54.6% year-over-year, and well ahead of analyst estimates. On its earnings call, it discussed the low penetration in the collaboration workspace:
“We believe the world's 1.25 billion global information workers would benefit from a platform like Asana, and we've penetrated less than 3% of the employees at our own customer base. Effective team collaboration requires the three Cs: content, which includes cloud storage and file sharing; communication, which includes chat and video conferencing; and coordination.”
It has been an exciting start for the future of work theme this year, and we expect the positive news flow to continue in 2021 as digital transformation efforts remain at the forefront of companies’ minds.
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