Presentation of the Bessemer 5Cs of SaaS Finance: CMRR, Cash, Churn, CAC ratio and CLTV. This presentation includes an overview of the current SaaS public valuations and provide some thoughts for SaaS companies going into their 2009 planning.
More on SaaS finance at http://www.cracking-the-code.blogspot.com/
3. NO, NO, I WAS QUOTED OUT OF CONTEXT. WHAT I REALLY SAID WAS “I DON’T BELIEVE IN SAAS-QUATCH!” A Prediction….
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8. Lehman Bank employees stage a protest by blockading the entrance to the Bank's Headquarters
9. Things have changed: SaaS valuation plummeted… The SaaS 13 Index Base 100 = Jan 1st 2008 -60%
10. Growth and Cash Flows are not enough to support valuation… Revenue Growth USD million LTM Cash Flows from operations: $60m Omniture Inc. (Nasdaq: OMTR) YTD stock performance: -69% (vs. -38% for NASDAQ) Trading at 2.2x EV/2008 Rev. Base 100 = Jan 1st 2008
11. …and no one has been spared! 60% < Loss 40% < Loss < 59% Loss <39% -51% -71% -69% -40% -35% -61% -60% -35% -56% -78% -54% -47% -80%
12. Root Causes Over aggressive marketing and securitization of mortgages Foreclosures Home Prices fall Consumer spend falls Bank assets write off and bankruptcy Access to credit vanishes Business spend decreases Lay offs Recession? Depression? Home Equity Lines decrease
13. How long will it last? Dow Jones evolution since 1929 Linear scale 1929 Crisis: 25 years to recover Dow fell from 350pts in 1929 to 40pts in 1932 (-89%). Recovers 1929 level in 1954 1987 Crisis: 2 years to recover Dow fell from 2,600pts to 1940 pts (-25%). Recovers 1987 level in 1989 2000 Crisis: 6 years to recover Dow fell from 11,500pts to 7,600 pts (-34%). Recovers 2000 level in 2006 2008 Crisis: Plan for multi-year recovery Dow fell from 14,000pts to 8,175 pts (-41%). How bad is it really? 1973 Crisis: 9 years to recover Dow fell from 1,050pts to 580 pts (-45%) in 1974. Recovers 1973 level in 1982
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18. Cash – Time to get your cost and revenue line crossing Expense Plan MRR Expected breakeven point Actual Expenses Lines are still not crossing! Time to get the lines to cross – even at the expense of growth