A SaaS company’s culture is a key determinant of its success. To grow a SaaS company really quickly, you need to create a product that customers can’t live without (the “Product/Market Fit”), delight your customers and ensure their success. This requires a superior company culture through Read More
SaaS companies grow much faster than SaaP (Software as a Product) companies. Public SaaS companies grew at 28% in 2014 versus 8% for SaaP companies (Software Equity Group). According to the Pacific Crest SaaS Survey, private SaaS companies grew even faster at a median rate of Read More
The typical SaaS company grows faster, loses more money, and has a higher valuations than product sale companies. Weighted Average Profitability Cash Flow from Operations Growth Price/Revenue Ratio Public SaaS Companies -8% +15% 33% 8.7x Public Software Companies +8% +28% 8% 3.3x Source: SEC filings – Read More
SaaS is characterized by a rapid evolution of product capabilities providing new features and benefits to the customer. The success of any SaaS business is critically dependent on its ability to provide their service with high reliability, security, privacy, and performance. In the “as-a-Service” world, Read More
The valuation of SaaS companies is much higher than software product sales companies. Public SaaS companies have an Enterprise Value to Revenue median ratio of 5.7x contrasted with 2.9x for software companies according to Software Equity Group’s 2015 Software Industry Financial Report. Do Investors love Read More
Customers are shifting from purchase software to SaaS subscriptions. They want the flexibility of only spending money for what they need, when they need it, with the advantages of having the most current offerings. They don’t want to be locked into the “stuff they Read More
SaaS companies are growing rapidly due to customer demand for cloud-based solutions. For public SaaS companies, the median growth is 28% while the median loss is 4.5% (Software Equity Group). A survey of private SaaS companies by Pacific Crest Securities reported a median 36% revenue Read More
Software is rapidly moving to the SaaS model. Public SaaS companies grew at 27.5% in 2017 versus 12.3% for Software companies (Software Equity Group). The revenue of a recurring SaaS subscription stream will exceed that of licensed software, but that typically takes nearly 3 years, SaaS Revenue Read More
Growth is a good thing. High growth SaaS companies have higher company valuations, have a better market perception, attract better employees, and can dominate their market. However, SaaS companies incur Sales & Marketing, “Revenue Acquisition Costs” before those costs are recovered by the profits from subscription revenue. Read More
High-growth SaaS companies are often unprofitable, yet financial institutions value them highly. The median net income for Public SaaS companies is negative 4.5%. Yet, despite these losses, the Price to Enterprise Value ratio for SaaS companies is 8.0x compared with 3.2x for Software companies, according Read More
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