I track the performance of the publicly-traded SaaS vendors and thought you might find it interesting. With the recent IPO of LogMeIn, there are 28 pure-plays. I track the financial performance for the company's last fiscal year and valuation performance on a quarterly basis (I use month ends of February, May, August and November).If you want to follow up on this with the author, please comment here or send him a message to jkeenan with the domain name impacsus.com.
Re: the financial performance, the story is growth and cash flow. For the last fiscal year, the SaaS vendors grew 31%, with on-demand revenue up 39%. I also track the 146 publicly-traded software vendors and their figures are total revenue up 16% and license revenue down 6.8% (all their growth is in maintenance and PS). It is clear that users are shifting their spend away from legacy perpetual models to SaaS models.
The 28 SaaS vendors averaged $160M in total revenue (14 were over $100M) and had an average operating loss of ($6.8M) - only 8 the vendors were profitable. However, their free cash flow was very strong and averaged $14.6M - 21 of the vendors were cash flow positive.
Spending on sales & marketing, R&D and G&A averaged 36.5%, 12.9% and 16.5% of revenue respectively.
Finally, while valuations have recovered in the past 6 months - interesting, the aggregate market cap for the 28 vendors is up about 29 % in each of the last 2 quarters - they are down 10% from August 2008 and 26% from the market's peak in October 2007.
Probably the most notable change is the reduction in valuations as a percentage of revenue. In August 2008, the valuations were about 6.1X trailing-twelve-months (TTM) revenue. As of August 2009, it's about 4.2X TTM revenue. In October 2007, it was over 10X TTM revenue.
Friday, September 4, 2009
Valuations and financials of SaaS vs. traditional enterprise software vendors
Interesting, thoughtful analysis from John Keenan ...