Vertical Software: Mid-cap winners in mission-critical markets
Technology
Vertical software companies continue to generate superior shareholder returns, supported by durable industry dynamics and deep competitive moats. These firms deliver domain-specific, high-utility solutions that integrate into mission-critical workflows, enabling strong customer retention and product-led growth grounded in sector expertise. Operating in oligopolistic, niche markets with winner-takes-most characteristics, they face limited competitive disruption due to unattractive risk-reward profiles for new entrants. 2Xideas’ in-depth report is structured in 4 parts: a comparison of vertical vs. horizontal software models; a review of the shared operational characteristics of vertical players; a proprietary scoring of 43 mid-cap vertical software names; and 10 highlighted investment ideas including Autodesk, Global-E Online, PTC and Tyler Technologies.
Edition: 214
- 27 June, 2025
Consumer Discretionary
GLBE benefits from the ongoing shift to e-commerce, in which brands are accelerating the search for incremental growth in international markets. Arete sees the business at an inflection point with the Sept launch of Shopify Markets Pro; this gives it access to $14bn of SMB cross-border GMV on SHOP. They model GMV growing 5x by 2027. GLBE also benefits from having its two leading partners (SHOP and DHL) as 13% shareholders and has limited competition for its “merchant of record” solution. Arete initiates coverage with a Buy rating and a TP of $58 (55% upside), based on a 9x EV/Sales multiple on 2025 sales of $1.2bn.
Edition: 173
- 10 November, 2023