3 Small-Cap Tech Stocks with Explosive Potential

The tech sector is buzzing with opportunity, and 2025 is shaping up to be a pivotal year for innovation. In this article, I have highlighted three small-cap tech companies that are brimming with potential for exponential growth: EverCommerce Inc. (EVCM), N-able, Inc. (NABL), and NetScout Systems, Inc. (NTCT).

Small-cap technology stocks might not grab headlines like Apple, Amazon, or Google, but they often pack a punch when it comes to growth potential. These companies, typically valued between $300 million and $2 billion, are often at the forefront of innovation, bringing fresh solutions to industries hungry for efficiency, security, and automation.

While they come with higher risks, their ability to adapt quickly and tap into emerging trends can make them compelling investment opportunities. With the Russell 2000 Index gaining 12.1% this year, small caps have gained momentum, driven by improving market conditions and a stronger appetite for growth stocks.

The broader tech industry is undergoing a transformation driven by advancements in AI, cybersecurity, and cloud-based IT solutions. According to Gartner, Inc. (IT), global tech spending is expected to reach $5.61 trillion this year, reflecting an increase of 9.8% year-over-year. Businesses are ramping up investments in software and digital infrastructure, pushing global software spending up by an expected 14.2% in 2025.

Considering these favorable trends, let’s analyze the fundamental aspects of the three small-cap tech picks.

EverCommerce Inc. (EVCM)

With a market cap of $2.01 billion, EVCM provides integrated software-as-a-service solutions for service-based small and medium-sized businesses in the United States and internationally.

In terms of the trailing-12-month EBITDA margin, EVCM’s 16.67% is 60.57% higher than the 10.38% industry average. Similarly, its 66.41% trailing-12-month gross profit margin exceeds the 50.08% industry average by 32.6%.

During the fiscal third quarter, which ended September 30, 2024, EVCM’s total revenues increased marginally from the year-ago value to $176.26 million, while its adjusted gross profit increased 3.3% year-over-year to $116.98 million. The company’s operating income amounted to $9.92 million, representing an increase of 57.6% from the prior year’s quarter. Additionally, its adjusted EBITDA came in at $44.51 million, up 6.5% year-over-year.

Street expects DOCU’s revenue for the fiscal year 2024 (ended December 31) to increase 2.8% year-over-year to $694.21 million. Meanwhile, its EPS for the same period is expected to grow substantially from the prior year quarter to $0.52.

Shares of EVCM have gained 13% over the past six months to close the last trading session at $10.93.

EVCM’s stance is apparent in its POWR Ratings. The stock has a B grade for Stability. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

It is ranked #11 among 18 stocks in the A-rated Software - SAAS industry. Click here to see the additional EVCM ratings (Growth, Value, Momentum, Sentiment, and Quality).

N-able, Inc. (NABL)

NABL provides cloud-based software solutions for managed service providers (MSPs) worldwide, facilitating their support of digital transformation and growth for small and medium-sized enterprises (SMEs). It has a current market cap of $1.88 billion.

On November 20, the company acquired Adlumin, Inc., a leading security operations platform provider, to enhance its cybersecurity offerings. Building on their existing partnership in extended detection and response (XDR) and managed detection and response (MDR) services, this acquisition strengthens NABL’s platform by integrating Adlumin’s advanced technology.

The move is expected to expand N-able’s security portfolio, drive recurring revenue growth, and set a new benchmark in cybersecurity for managed service providers (MSPs) and IT teams.

NABL’s trailing-12-month gross profit and levered FCF margins of 84.03% and 15.22% are 67.8% and 29.1% higher than their respective industry averages of 50.08% and 11.80%. Likewise, its trailing-12-month EBITDA margin of 23.72% compares to the industry average of 10.38%.

For the third quarter, which ended on September 30, 2024, NABL’s revenues increased by 8.3% year-over-year to $116.44 million. Its non-GAAP operating income came in at $37.54 million (with a margin of 32.2%), up 22.9% year-over-year.

The company’s non-GAAP net income came in at $24.25 million and $0.13 per share, up 41.3% and 44.4% year-over-year, respectively. Also, its adjusted EBITDA grew 22.6% year-over-year to $44.83 million.

For the full fiscal year 2024, the company expects its total revenue to range between $461.20 million and $462.70 million, representing approximately 9% to 10% year-over-year growth. It also anticipates adjusted EBITDA between $169.30 million and $169.80 million.

The consensus revenue estimate of $463.43 million for the fiscal year 2024, which ended December 31, represents a 9.9% increase year-over-year. The consensus EPS estimate of $0.46 for the same period indicates a 23.1% improvement year-over-year. The company has an impressive surprise history; it surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.

Over the past month, the stock has gained 10.2% to close the last trading session at $10.03.

NABL’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.

It also has a B grade for Value, Stability, and Sentiment. Out of 78 stocks in the B-rated Technology - Services industry, NABL is ranked #7. Click here to access the other NABL ratings for Growth, Momentum, and Quality.

NetScout Systems, Inc. (NTCT)

Valued at $1.73 billion, NTCT provides assurance and cybersecurity solutions. Its primary products are Service Assurance Solutions for network and application performance, business intelligence analytics, and cybersecurity solutions.

On November 13, 2024, NTCT expanded its partnership with Arelion to enhance DDoS attack mitigation, reinforcing the security of Arelion’s top-ranked global Internet backbone. By integrating NTCT’s advanced threat intelligence and mitigation solutions, Arelion can offer stronger protection against rising cyberattacks on critical infrastructure. This collaboration reflects the growing demand for the company’s offerings in the cybersecurity space and expands its impact in securing global enterprises.

The stock’s trailing-12-month gross profit margin of 77.67% is 55.1% higher than the industry average of 50.08%. Also, its trailing-12-month EBITDA and levered FCF margins of 16.37% and 21.78% are 57.6% and 84.6% higher than the 10.38% and 11.80% industry averages, respectively.

NTCT’s total revenue increased 15.6% year-over-year to $252.02 million in the fiscal 2025 third quarter (ended December 31, 2024), while its gross profit grew 17.7% from the year-ago value to $205.41 million. The company’s income from operations stood at $61.71 million, compared to a loss of $134.45 million last year.

In addition, its non-GAAP net income amounted to $68.28 million and $0.94 per share, representing increases of 31.2% and 28.8% from the prior-year quarter, respectively.

Analysts expect NTCT’s revenue for the fiscal 2026 first quarter (ending June 2025) to increase 11.1% year-over-year to $193.90 million, while its EPS for the same quarter is expected to grow 32.1% from the prior year to $0.37. Moreover, the company has surpassed the consensus EPS estimates in each of the trailing four quarters.

NTCT has gained 29.6% over the past six months to close the last trading session at $24.09.

It’s no surprise that NTCT has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. It has an A grade for Growth and a B for Value, Sentiment, and Quality. Within the Technology - Services industry, it is ranked second.

In addition to the POWR Ratings we’ve stated above, we also have NTCT’s ratings for Momentum and Stability. Get all NTCT ratings here.

What To Do Next?

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EVCM shares fell $10.93 (-100.00%) in premarket trading Thursday. Year-to-date, EVCM has gained 0.18%, versus a 3.14% rise in the benchmark S&P 500 index during the same period.

Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.

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