It May Not Be the Best of Times, But Times Are Not Bad For SaaS
Posted by Bob Warfield on November 12, 2008
I took fellow Enterprise Irregular Larry Dignan and a few others to task for rallying around Netsuite’s earnings announcement as a sign of weakness for SaaS. Larry said of SaaS, “It should be the best of times, but it isn’t,” and I said that (along with remarks by some others) was curmudgeonly behavior. I pointed out that SaaS companies including NetSuite were doing pretty well compared to the likes of On-premises companies, particularly when you view it through the lens and perspective of the worst recession we have seen in 70 years.
Along comes Concur’s earnings announcement today after market close, and I have to say that it is a ringing endorsement both for Concur and for the SaaS model in general. As I look, Concur is up 10% in after hours trading on a day when everything else I monitor was in the red and the DJIA in general was down 176 points.
A few details from the announcement:
– Total revenue for fiscal 4Q08 was $57.5M, up 61% year on year and up 5% sequentially. At a time when most companies are projecting a deepening recession Concur managed to grow sequentially.
– Total revenue was $215.5M for fiscal 2008, up 67%. When was the last time you heard of an on-premises public software company that had grown 67% in annual revenues?
– Net income is growing and cash flow is way up 222% from the year ago quarter. I’m with Warren Buffet and others in being more interested in cash flow than net income.
Of course this beats the street handily, and that’s one reason the company is up after hours.
The company is giving guidance for growth in 2009.
So once again, for the SaaS doubters out there, which On-premises companies are posting results like this?
Clearly customers and the market are voting their pocketbook, at least for Concur. It’ll be interesting to see how well Salesforce is sustaining their momentum with the next announcement.
These are not the best of times for anyone, but the times are not bad for SaaS companies.