SaaS Companies are Growing Nicely

I previously covered Omniture, Concur, Right Now, Taleo, and Citrix as part of the Enterprise 3.0 series. Let us now look at how they have fared since then.

On October 30, Omniture, Inc. (NASDAQ: OMTR) (My previous coverage can be found here.) reported its financial results for Q3 2007. Revenue was $37.4 million, up 78% y-o-y and 12% sequentially. Its GAAP net loss was $1.1 million or $0.02 per diluted share, compared to a net loss of $1.3 million, or $0.03 per diluted share, in Q3 2006. Its total customers increased by 240 to nearly 2,700.

For Q4 FY 2007, Omniture expects revenue to be between $40.6 million and $41.6 million, and GAAP net loss is expected to be between $0.02 and $0.01 per diluted share. For the full fiscal year 2007, GAAP revenue is expected to be between $140 million and $141 million, and GAAP net loss is expected to be between $0.18 and $0.17 per diluted share.

In October, Omniture acquired Visual Sciences, a leading provider of real-time analytics applications for $394 million. Earlier in September, it acquired Offermatica, a leading on-demand A/B testing and multivariate testing company for $65 million. Its stock is currently trading around $30 after hitting a 52-week high of $38.57 on October 26. It has a market cap of around $1.8 billion.

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On November 19, Concur (Nasdaq: CNQR), reported its financial results for Q4 2007. (Earlier posts are available here, and here, and my interview with CEO Steve Singh can be found here.) Its total revenue for Q4 was $35.7 million (up 30% y-o-y and 7% q-o-q), which was driven by a 37% y-o-y increase in subscription revenue. The company's net income was $4.1 million, or $0.10 per share, compared to net income of $1.0 million, or $0.03 per share, in Q4 2006.

For fiscal 2007, its total revenue was $129.1 million, up 33%. Its net income was $8.2 million, or $0.20 per share, compared to $ 34.2 million, or $0.87 per share for fiscal 2006. For 2008, Concur expects revenue to be $200 million and pro forma EPS to be $0.70 per share.

Concur launched its Concur Travel and Expense with Smart Expense in October. During the quarter, it won a global contract with Merrill Lynch (MER) for its Travel Expense and Vendor Payment services.

Concur completed its acquisition of H-G Holdings, Inc. and its subsidiaries, including Gelco Information Network, Inc., on October 1, 2007. To fund this acquisition, it offered 5,405,000 shares of common stock to the public at $28.50 per share. Its stock is currently trading around $35 after hitting a 52-week high of $38.5 on December 10. Its market cap is around $1.5 billion.

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On October 24, RightNow Technologies, Inc. (NASDAQ: RNOW) (My previous coverage can be found here.) announced financial results for Q3 2007. Its revenue was $29.2 million, down 3% y-o-y, which reflected the impact of its business model shifting away from perpetual licenses in 2007. Its recurring revenue grew 31% y-o-y, and the company's net loss was $3.6 million or $0.11 per share, compared to a net loss of $0.5 million or $0.02 per share in Q3 2006.

For Q4 2007, RightNow expects revenue to be about $29.5 million, and net loss per share is expected to be between $0.10 and $0.11. For the full fiscal year, revenue is expected to be about $111 million, and net loss per share between $0.56 and $0.57. Its stock is currently trading around $15 after hitting a 52-week high of $23.38 on October 26. Its market cap is around $511 million.

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On November 1, Taleo Corporation (NASDAQ: TLEO) (My previous coverage can be found here.) reported its financial results for Q3 2007. Its revenue was $33.7 million, up 36% y-o-y and 9% q-o-q, which was driven by a record 35% y-o-y increase in application revenue, and a 37% y-o-y increase in services revenue. Its GAAP net income was $2.2 million, or $0.08 per diluted share, compared to GAAP net loss of $(0.8) million or $(0.04) per diluted share in Q3 2006. The company's total customers increased to over 1,380 customers with more than one million application users.

In October, Taleo acquired WetFeet Inc.’s web-based recruiting product, WetFeet Recruiter, an applicant tracking system. It has recently announced a strategic alliance with Paychex (PAYX)(a company that I think ought to roll-up the category) for marketing its online recruiting and hiring management tool, Taleo Business EditionTM. Its stock is currently trading around $29 after hitting a 52-week high of $32.41 on November 2. Its market cap is around $750 million.

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On October 18, Citrix (NASDAQ: CTXS) reported its financial results for Q3 2007. (Earlier posts are available here and here.) Its revenue was $350 million, up 26% y-o-y. Net was $61 million, or $0.33 a share, up from $44 million, or $0.23 a share in Q3 2006. Adjusted EPS was $0.41, up 21% y-o-y.

Segment-wise, App Virtualization products' Group revenue was $243 million grew 17% y-o-y to in revenue. The Application Networking Business group grew 55% y-o-y to revenue of $46 million. Citrix online had revenue of more than $55 million, up 43% y-o-y, which was led by growth in GoToMeeting and GoToWebinar real time App collaboration solutions that had more than 90% y-o-y revenue growth.

For Q4, Citrix expects revenue between $374 million and $382 million, including $58 to $60 million from online services. Its adjusted EPS is estimated to be between $0.42 and $0.43. For the full fiscal year 2007, total revenue is expected to between $1.36 billion and $1.37 billion, and its adjusted EPS is expected to be between $1.52 and $1.53 per share. In 2008, Citrix is planning to expand outside North America.

In October, Citrix acquired XenSource, a leader in enterprise-grade virtual infrastructure solutions for $500 million in the midst of the Vmware (VMW) IPO frenzy.

In November, Citrix entered into a partnership with Dell (DELL) to offer Citrix XenServer OEM Edition across Dell’s PowerEdge server line, bringing server virtualization technology to millions of Dell customers. Its stock is currently trading around $37 after hitting a 52-week high of $43.90 in early November. Its market cap is around $7 billion.

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In summary, right now, most of the category is trading below their 52-week highs, and the market is somewhat soft at the moment. If you are looking for things to buy, SaaS is a great category to load up on. I am pretty sure that the growth in these companies will continue over the next 3-5 years. What’s more, we should see some very interesting M&A activity in 2008.

P.S.: I am somewhat surprised that Internet funds like Munder Internet Average (MNNAX) have not realized that instead of eBay (EBAY), they should be stocking up on the SaaS companies. It goes to show how little imagination or insight some of the fund managers have!