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SaaS Companies Perform Despite Recession Fears

Posted on Tuesday, Feb 19th 2008

In an earlier post, I had said that SaaS companies will see growth over the next 3-5 years with potentially some M&A activity this year. Let us look at them again based on recent results.
You can also read my interview with Michael Gregoire, CEO of Taleo and with Steve Singh of Concur. You can also read my Forbes article on why I think the next VMWare will emerge out of SaaS.

On February 8, Omniture, Inc. (NASDAQ: OMTR) reported its Q4 and 2007 fiscal year results. Earlier coverage is available here and here. Q4 revenue went up 84% y-o-y and 15% q-o-q to $43.1 million. GAAP net loss was $1.8 million or $0.03 per diluted share, versus last year’s $0.8 million or $0.02 per diluted share and $1.1 million or $0.02 per diluted share in Q3 2007. In Q3, net loss had decreased 15% y-o-y. In Q4, Offermatica was included in the results and this added a GAAP net loss of $0.58 million. Excluding Offermatica, GAAP net loss would have been $580,000 or $0.02 per share, in line with its guidance of $0.02 to $0.01.

2007 revenue grew 79% to $143.1 million. GAAP net loss was $9.4 million or $0.18 per diluted share, versus net loss of $7.7 million, or $0.25 per diluted share last year. Its headcount more than doubled to 753 and with the recent Visual Sciences acquisition, it has now more than 1000 employees. During the quarter, Omniture added 350 customers taking the total to 3050 and its recent Visual Sciences acquisition added another 1300 customers.

Regionally, international revenues represented 26% of total revenues in Q4 and fiscal year 2007, up from 18% in Q4 2006 and 17% in 2006.

For Q1, Omniture expects revenue to be in the range of $66 to $68 million and GAAP net loss between $0.14 and $0.13 per share. For 2008, it expects between $295 million and $300 million. GAAP net loss is expected to be in the range of $0.49 to $0.45 per share. Its stock is currently trading around $25 and market cap is around $1.5 billion.

Chart for Omniture Inc. (OMTR)

On January 30, Concur (Nasdaq: CNQR) reported its Q1 2008 financial results. Earlier coverage is available here, here, and here. Revenue grew 69% y-o-y and 38% q-o-q to $49.4 million, driven by 83% growth in subscription revenue. Net income was $3.4 million, or $0.07 per share up 240% y-o-y. During the quarter, it added 400 customers.

For Q2, Concur expects revenue to be $50.0 million (60% growth) and EPS to be $0.04. For 2008, it raised its guidance from revenue of $194.5 million to $204 million. EPS guidance has been raised from $0.15 to $0.22. It expects the economic slowdown to work in its favor as companies would be more likely go for automating processes that control costs. Its stock is trading around $30 and market cap is around $1.3 billion.

Chart for Concur Technologies, Inc. (CNQR)

On February 6, Taleo (NASDAQ: TLEO) reported its Q4 and 2007 results with record annual revenue of $128.0 million, up 32% and GAAP annual net income of $3.9 million (versus net loss of $2.6 million in 2006). Q4 revenue went up 30% y-o-y and 2.3% q-o-q to $34.5 million and GAAP net income was $2.5 million.

The quarter saw record number of new enterprise customers with 26 new Taleo Enterprise Edition™ customers. Taleo also announced partnership with Paychex to offer SMBs an integrated HR solution. The company has a new performance management product which it hopes to up-sell to the existing customers. Even without that, Taleo also has a serious backlog, making life rather wonderful and predictable.

Segment-wise, recurring application revenue increased 31% y-o-y to $28.4 million in Q4 and 33% to $105 million in 2007. Consulting revenue was up 25% to $6.11 million in Q4 and 28% to $22.85 million in 2007.

For the quarter, international revenue was 11% of the total revenue. Its stock is trading around $19.5 after hitting a 52-week high of $34.20 on December 27. Market cap is around $489 million.

Chart for Taleo Corp. (TLEO)

On January 30, RightNow Technologies, Inc. (NASDAQ: RNOW) announced results for the fourth quarter and 2007. RightNow is the weakest company in our SaaS coverage, mainly because the company has not yet fully completed its transition from the licensed software business model to SaaS. Concur went through a similar transition, and emerged successfully. Rightnow may also emerge over time.

Meanwhile, fourth quarter total revenue was $30.7 million, up 7% y-o-y and 5% q-o-q. Net loss was $3.3 million or $0.10 per share, compared to net loss of $2.3 million, or $0.07 per share, in the fourth quarter of 2006 and $3.6 million or $0.11 per share, in Q3 2007. The company has been working to shift its business model from one-time licenses to recurring licenses, but the pace of the shift hasn’t matched Wall Street expectations. Q4 net loss was more than analyst estimates sending its stock tumbling down to a 52-week low of $9.70 the next day. Its stock is currently trading around $13. Market cap is around $420 million.

Chart for Rightnow Technologies Inc. (RNOW)

For the full year 2007, revenue was up 2% to $112 million. Recurring revenue grew 34% y-o-y to $85 million. Net loss was $18.6 million or $0.56 per share, compared to net loss of $5.0 million or $0.16 per share in 2006.

RightNow added 60 new customers in the fourth quarter and more than 250 new customers for the year.

For the full year 2008, RightNow expects revenue between $135 and $140 million, with recurring revenue growth of approximately 25%. Net loss per share is expected to be in the range of $0.36 to $0.27.

For the first quarter of 2008, it expects revenue to be between $31 and $32 million and net loss per share between $0.17 and $0.14.

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