Quarterly Financial Tracker: Q2 CY 2010 - SaaS Vendors Still Show Massive YoY Growth

The majority of 22 publicly traded software vendors demonstrated solid year-over-year (YoY) quarterly growth from Q2 2009 (see Figure 1).   Every SaaS vendor in the Software Insider Index® drove 14% to 26% growth (see Figure 2) despite the pick up in on-premises license sales.  Highlights for the 2010 CY Q2 2010 results:
On-Premises Trends

  • JDA Software (59.19%) and Manhattan Associates (32.93%) continue to ride the CPG, retail, and supply chain investment wave.  Manhattan solidified a significant turnaround in 2 quarters of growth.
  • Large mega vendor bellwethers Oracle (12.95%) and SAP (12.34%) showed significant double digit growth.  SAP's license gains of 17.31% demonstrate a turnaround in the sales team.  All indications point to BOBJ and the non-EMEA regions driving sales growth.
  • The SMB vendors shared mixed results with Epicor (8.68%), Lawson (5.81%), and CDC Software (3.92%) continuing to grow key license revenues.  While IFS total revenue gains were low in the 1.40%, IFS grew license revenue by a whopping 19.77%.
  • Unfortunately, other SMB vendors Exact (-4.99%) and Deltek (-7.07%) showed negative revenue momentum.  These vendors not only lost ground in license revenue but also saw declines in traditionally stable maintenance revenue.
  • Maintenance fee growth remains healthy for most vendors as new programs to show value to customers gain traction.

SaaS Trends

  • SaaS vendors continue to grow in mid to high double digit growth rates for subscription revenue. SuccessFactors (26.81%), Salesforce.com (24.78%), and Concur (20.49%) moved past 20% year over year quarterly growth.
  • Ariba ($93.2M) nears the $100M per quarter revenue benchmark as Blackboard ($101.5M) continues to grow from this achievement in Q1 2010.
  • RightNow (19.58%), NetSuite (16.83%), Ultimate Software (15.67%), and Taleo (14.63%) all showed solid quarters of growth, though these growth percentages show slight declines.
Figure 1.  Software Insider Index® On Premise Vendors: Q2 CY 2010

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Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.

Figure 2. Software Insider Index® SaaS Vendors: Q2 CY 2010

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Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.
The Bottom Line - IT Budgets Have Opened Up For Software Purchases, Hybrid SaaS Models The Norm

Despite the rocky recovery and potential for double digit recession, pent up demand drives the current on-premises vendor revenue growth.  Organizations continue to invest in technology despite the lack of job creation.  However, on-premises vendor gains have not impacted SaaS vendor growth.  In fact, most organizations continue to adopt Scenarios 1 to 3 in their Cloud/SaaS strategies. As hybrid models reach tipping points, successful apps strategies must focus on SaaS integration, SOA adoption, and information governance.

Your POV.
Can we help you work with a specific vendor?  Please post or send on to rwang0 at gmail dot com or r at softwareinsider dot org and we’ll keep your anonymity.  Further, let us know if you need help with your next gen apps strategy, overall apps strategy, and contract negotiations projects.  Here’s how we can help:
  • Designing a next gen apps strategy
  • Providing contract negotiations and software licensing support
  • Demystifying software licensing
  • Assessing SaaS and cloud
  • Evaluating Cloud integration strategies
  • Assisting with legacy ERP migration
  • Planning upgrades and migration
  • Performing vendor selection
  • Renegotiating maintenance

Disclaimers* Not responsible for any math errors or erroneous revenue information.
1. Calendar year estimates based on the quarter nearest the calendar year.
2. Why these vendors than others?  Easy – because I cover them.
3. Exchange rates as of February 25th, 2010 for vendors who have not published quarterly conversions.  Not responsible for currency flux.
4. Estimates created for privately held vendors, when listed.
Not sure? Please read the quarterly filings yourself =)
Related resources and links

2010 Calendar Year Q1
Software Insider Index™ (SII): 2009 SII Top 35 Enterprise Business Apps Vendors™
2009 Calendar Year Q4
2009 Calendar Year Q3
2009 Calendar Year Q2
2009 Calendar Year Q1
Software Insider Index™ (SII): 2008Software Insider IndexTM (SII): SII Top 30 Enterprise Business Apps VendorsTM & SII Top SaaS Business Apps VendorsTM SII Top 30 Enterprise Business Apps Vendors™
2008 Calendar Year Q4
2008 Calendar Year Q3
2008 Calendar Year Q2
2008 Calendar Year Q1

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Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.