SaaS Business Drivers

Hello WSO Team,

When looking at a company that engages in SaaS and serves a specific niche, how do you look at the levers and drivers of the business? I would automatically assume that the #1 driver would be the industry performance in which the company operates out of. That said, and taking a deeper approach, what additional research would you do if you had to interview with a Director of Strategy/FP&A or Operations?
Much appreciated!

Comments (7)

Jul 5, 2019

Hi 512Finance, any of these topics helpful:

  • Acquisitions in Institutional Shop vs. Private Firm Role at a Top shop (e.g. CBRE Global Investors, Blackstone) Or an Analyst role directly supporting ... a principal at an investment firm that has a decent portfolio looking to expand? Said principal plans to be ... a direct mentor and teach you the business from the ground up. What are some considerations you might have ...
  • Get an edge on the competition- ask Vantage Point MBA your business school application questions consulting firm, for our 2019 MBA partnership! The Vantage Point MBA team is available for WSO members to ... answer your questions about MBA applications in the Business School Forum. The Vantage Point MBA team, ...
  • Moving from Small Private Client Investment Sales firm to Larger Shop (CBRE, HFF, JLL, Cushman) college. I got my start more or less as a "gopher" for the top two guys in a boutique MF shop ... started by ex Marcus & Millichap Brokers. After about a year our small team of 3 left that firm, as my ... our mentors playbook and jump ship to start our own team, doing business through a nationally known ...
  • Does anyone know of any Private Equity firms that invest in SaaS companies > $10m revenue? I am just curious if there are any well-known boutique/mid-sized firms investing in smaller deal ... sizes that you guys/gals may know of? SaaS ...
  • A Day In The Life of a SaaS Sales Development Rep role at a hot startup in the SaaS sphere. We are innovating and disrupting in our field, and I wanted ... day, see if competitors launched something overnight, and I love business. You wouldn't think it ... I start calling business from 6:45AM till about 11:00AM. The calls I make are to our middle market segment ...
  • Startup PE Shop- Self Funded I was recently offered a position at a very small PE firm. For background:-The firm started ... fees. I understand the major pros and cons of joining such a small firm but it seems as if they are ... I am a very risky person and see the vast potential upside if this firm was to escalate quickly. ...
  • AMA: Top Quant Firms First Year Comp 250k to 400k First some background, I am a senior and am heading to a quant shop for full time this summer. ... first year compensation at quant shops and there is quite a bit of misleading information. I wanted to ... after negotiations. Aside from the quant firms, I also had offers from tech companies. Most of the ...
  • Public SaaS Company Valuation whose business model is SaaS based. I'm working on forecasting next 5 years revenue growth and was ... HF that has done granular forecasting/modelling for public Saas companies. No Yes 145035 410794 ...
  • More suggestions...

You're welcome.

Jul 24, 2019

Difficult to tell but you would look at the usually suspects in terms of metrics:
Bookings, Billings, CAC, LTV, Churn etc.

I would do a Booking/Revenue ratio over time to get a sense of how healthy is the growth of the business. SaaS businesses usually make for pretty smooth revenue charts but terrible when it comes to cash flows (companies usually do multi year contracts, prepayments etc which have a tendency to distort the pretty picture the IS is painting ;) )

    • 1
Oct 13, 2019

@choubix (and @choubix2 ), thank you, how would you use Booking/Revenue? What is good/bad for that metric? What does it show? Thanks!

Oct 20, 2019

If booking/revenue ratio goes down over time, so will revenue in the long run.
A company may show healthy revenue growth but not present its bookings because they are stagnating which will point in the direction of less revenue (and cash) in the business later.

If they do cohort analysis I would look at payback period: how long does it take for each cohort (after deducting direct costs) to payback the S&M cost incurred in their acquisition.

Jul 24, 2019

Often overlooked, a key factor is the sassiness of mgmt

Jul 29, 2019

Is there a specific niche you had in mind? Or any niche, just in general?

Jul 30, 2019
Comment

Array