Cloudy revenue forecast for SaaS as clients defer contract calls

Cloudy revenue forecast for SaaS as clients defer contract calls

author-image

Supriya Roy

29 reads
author-image

Aditi Shrivastava

145 reads
author-image

Supriya Roy

29 reads
author-image

Aditi Shrivastava

145 reads

Enterprises are re-evaluating software tools’ indispensability to save cash. Contract discussions are dragging on for months with demands for discounts and opt-out clauses. SaaS companies must brace for slower growth in annual recurring revenues after the brutal valuation correction

July 05, 2022

11 MINS READ

In the first half of 2022, listed software-as-a-service startups were swept along in the global tech tumult, with public cloud’s market cap falling over 40% from its high November perch. The once-remarkable median revenue multiples, the measure investors use to bestow value on a company, languish in near-single digits now.

It’s been a “SaaSacre”, as US venture-capital firm Bessemer put it in a report in May.

Such a vertiginous slide would have sent many other tech sectors into deep despair, hollowing out interest in an instant (think quick delivery in the US and Europe). That hasn’t happened in this case; there is no domino effect yet. 

If anything, startup backers’ newfound distaste for risk and loss-making businesses has indirectly made Indian SaaS alluring, as evidenced by a flurry of early-stage funding deals in recent months. Software distributed through the internet remains a reliable revenue generator as companies of all manner need digital tools in a post-Covid-19 world.

But can this demand stay intact amid recession fears? There are some early signs of strain.

share

Share this read

bookmarklike
like
bookmark
share
share

Share this read

bookmarklike
like
bookmark
share
share-button
like-button
share-button

For subscribers only

Premium Reads

>>

View More >>

Deeply reported and objective news on the country´s fastest-growing companies and the people behind them.