June 2019 Movements in the SMB Software Index
June was a strong month for markets overall and saw the SurePath SMB Software Index gain 8.6%. It compared favorably to the S&P 500 and the Dow Jones indices, both of which gained ~7.2%. However, the SMB Software Index was outperformed by the Nasdaq, which gained an impressive 9.2% in June.
Drivers of Movement
The SCP SMB Software Index is a weighted based on the market capitalization of the 37 companies that are included in the index. The market cap of the top 5 companies accounts for more than half of the total market cap combined index and therefore, the movement of these 5 companies influence the SMB Software Index as a whole.
June was the third month in a row where there was a change in the makeup of the Top 5 constiuents of the SMB Software Index. Square reclaimed its spot among the top 5 after it gained nearly 20% during the month, replacing Paychex, which lost 2.5%. During the month, Square announced that it had hired a former Google director as the first member of its new crypto team and announced several integrations with food delivery services.
The Top Gainers and Losers for June
June's top performer was Lightspeed POS, which posted excellent FY2019 results in its first ever earnings release as a public company. The company delivered a combination of strong growth (recurring software revenue grew 34% YoY), expanding gross margins (up over 50 basis points YoY), and a significant increase in gross transaction volumes.
The month's poorest performer was New Relic, which lost over 9% during the month, driven partly by Goldman Sachs having initiated coverage on the company with a "Sell" rating.
Here’s how all index companies stacked up in June
You can follow the SurePath SMB Index in real time at: http://www.surepathcapital.com/smb-index
About SurePath Capital
Based in Toronto and San Francisco, SurePath Capital Partners is the only investment bank focused exclusively on the global SMB software market. We work with sellers in this market to ensure they are funded for growth and positioned for meaningful exits. In addition, we work with buyers in this market to help shape their strategy and execute acquisitions.