With the third edition of the Montclare SaaS 250, we set out to do what SaaS leaders do best: deliver an ever-better product. We hope our latest research gives our readers even more insight into exactly what makes Montclare SaaS 250 companies the leaders in the industry –– fresh insight that you can apply directly to your own SaaS business, or to make informed decisions about the SaaS software industry.
This year, Montclare Research developed a new proprietary algorithm that ranks Montclare SaaS 250 companies. Although we acquired 60 data points on the companies considered for the list, our algorithm utilizes 20 of them to calculate the ranked order of the public and private software companies that comprise this elite group.
In this research, we also introduce the Montclare SaaS Kingdom, a maturity model we developed to help you easily interpret the profiles of companies featured. The animal motif makes it effortless to understand companies’ size, type of business model used and other behaviors.
As you read through the Montclare SaaS 250, keep an eye out for rhinoceros, rabbits and everything in between. In today’s SaaS ecosystem, there’s room for everyone to survive, and thrive.
The algorithm incorporates 60 data points for each company to calculate the rankings of the 250 public and private software companies
Ten years into the market’s broad transition, it is clear that SaaS in not just a fad. In 2014 we saw a number of proof points that show SaaS momentum is accelerating globally:
, , and are all moving toward a cloud-based model. They know they won’t be relevant, long-term, if they don’t.
There, the prolonged economic downturn is having a similar effect on buyers that the Great Recession of 2008 did in the US: software buyers’ budgets are lower, and the OpEx model is looking a lot more attractive than traditional software CapEx.
We see this as a general trend across the UK, the Netherlands and northern Europe. It is less evident inside Germany and France, where privacy laws make it difficult for SaaS firms to service those markets unless you have a data center in-country. But in Germany and France, the local software companies are already there, since these two countries are already two of Europe’s largest markets.
Although we are not seeing this precise market dynamic in Asia and Latin America, buyers’ enthusiasm for OpEx, not CapEx, is a global trend.
From our vantage point in Silicon Valley, we are seeing heavy investment in young SaaS firms. In the last 12 months, eight companies have received $100 million or more in a single financing round. Even young, pre-revenue companies are receiving $5-10 million, before having proven themselves in the market.
That said, investment money isn’t quite raining from the heavens. Investors are focusing on key categories such as CRM, Marketing, IT Management and Customer Success.
In many enterprise categories, we see well-funded SaaS firms giving established incumbents a run for their money. These new challengers are going to market aggressively, hiring SaaS sales reps and giving away free product to incumbents’ customers. Suddenly, being a traditional, licensed-based software company with a big installed base, established processes and metrics isn’t an advantage, it’s a target.
Companies that can strategize well, and execute even better, can become SaaS winners. But the winning strategy doesn’t always have to be pure SaaS. In the SaaS kingdom, just like the animal kingdom, competition is fierce, but many types of players ultimately coexist.
Montclare has developed the Montclare SaaS Kingdom, a maturity model showing how companies with varying profiles on the SaaS spectrum can succeed. Companies like Oracle and Cisco are Elephants, Saba and FrontRange are Rams, and AtTask and Coupa are Squirrels. We use the animal classification system in our commentary on Montclare SaaS 250 companies, to give our list much more depth than traditional Top Ten-style rankings.
One thing is for sure. Software companies can no longer be ostriches, sticking their heads in the sand and hoping SaaS will go away. As you learn more about the state of the SaaS industry from Montclare’s research, you’ll see that companies ignoring SaaS may not go out of business, but are likely to become irrelevant.
In the SaaS Kingdom, just like the animal kingdom, competition is fierce, but all kinds of players ultimately coexist
The Montclare SaaS Kingdom provides a framework that software companies can use to assess their current level of SaaS maturity and establish strategic growth goals.
(1) In 2013 Adobe announced they would no longer sell on-premise license software and required their customers to move to SaaS.
(2) This Australian company offers a variety of collaboration and infrastructure software and has filed to go public.
Worldwide, the SaaS market landscape continues to grow. The European market is beginning to gain momentum and there are early signs of movement in Asia. North America still dominates the global SaaS market, with a high concentration in Northern California. This is because the North American market started out more than a decade ago, and this market is now actively shifting from a traditional license model to subscription.
Around the World in Sixty Seconds
Europe is making a strong move toward SaaS. As in North America after the 2008 recession, European companies are embracing the pay-as-you-go software format. Key growth areas include Western Europe and the Nordics, where SaaS firms like Questback, Cision and Basware are expanding quickly.
In Asia Pacific, we see initial signs of SaaS traction in Australia, India and Japan, but it is still early. In this region a number of interesting small SaaS firms are emerging, and we anticipate seeing more in the near future. A few Asian and Australian SaaS companies made it into this edition of the Montclare SaaS 250, including , Xero, MYOB, Ramco Systems and MindTree.
The one market that hasn’t seen much in the way of SaaS adoption is the Latin American market. This market has looked to North America for most of its software needs and there are few indigenous Latin American software providers. Security requirements in Colombia and other Latin American countries also may be contributing to the lack of SaaS interest in the region.
In North America there is a strong mix of all types of Hybrid companies (Elephants through Rabbits) and pure SaaS companies (Rhinos all the way down to Squirrels). By contrast, in Europe there are many types of Hybrid companies, including Elephants like . There are not many pure SaaS companies but they are more often Squirrels than larger animals.
North American market started out more than a decade ago and this market is now actively shifting from a traditional license model to subscription
In Asia Pacific and Latin America, SaaS markets are not as developed as in North America or Europe. Here there are more Hybrid companies and very few SaaS companies. For example, Asia Pacific has many Hybrid Elephants and Bears including Fujitsu, Hitachi and Trend Micro in Japan. Squirrels are prevalent in countries like Australia, New Zealand and India. In Latin America, Brazil tends to have Bears, and there are some Squirrels in Chile and Columbia.
Who Offers SaaS, and Where
One very noticeable change is the percentage of software companies offering some form of a SaaS solution. The 98% figure includes a growing percentage of pure SaaS solutions (9%), along with Hybrid SaaS (89%) solutions such as hosted and managed services offerings. The key point: companies that do not offer some type of subscription software alternative are at a competitive disadvantage with customers interested in these types of online solutions.
Montclare’s analysis of the global market breaks down software companies into three groups:
- Independent Software Vendors (ISVs) that currently don’t offer any type of online solution.
- Hybrid companies offering both on-premise and SaaS solutions.
- SaaS companies that exclusively provide on-line solutions.
In North America, the most mature market, approximately 30% of all providers deliver SaaS solutions exclusively; only 5% are ISVs. This is in contrast to Latin America, the most nascent market, where the majority of providers are Hybrids, and a significant percentage of ISVs deliver only on-premise software products.
Source: IDC
Historically, as regions mature, they develop specific industry and vertical software solutions to address more complex market requirements. This also holds true for SaaS. Compared to our last report, the global SaaS market has evolved regionally, in terms of the number of providers, growth rates and the types of solutions offered.
As buyer sentiment continues to favor SaaS-based solutions, we expect newer markets around the world to start maturing at a faster rate.
Companies that do not offer some type of subscription software alternative are at competitive disadvantage
The acquisition rate for SaaS companies has moderated from the rush of 2013. However, multiple large SaaS companies continue to buy up small to mid-size SaaS firms to add to their cloud portfolios.
Interesting trends in SaaS M&A include:
- Smaller deals: With valuations of SaaS companies hovering around 4.6x revenues, many acquiring companies have shifted their attention away from mid-sized Hybrid Bears and Rams or SaaS Lions or Deer, and are now targeting more affordable Hybrid Rabbits and SaaS Squirrels. These deals are similar to PROS Holdings’ acquisition of vertical solution provider SignalDemand. The Hybrid Elephants and SaaS Rhinos are still hunting the larger targets, but there is a marked slowdown in the SaaS mega-deals we saw several years ago.
- Going private: Some of the Hybrid Elephants and Bears have decided that it is easier to transition to the SaaS model if they aren’t public companies. A number of private equity companies are not only doing vertical-specific roll-ups; large public companies are also going private, to allow more flexibility in transitioning their business models. “Take-privates” include Dell, BMC, Unit4 and Vocus.
- "Acqui-hires": This move entails a larger company purchasing a smaller SaaS company not only for their customers or product; the acquirer is also looking to secure a SaaS-experienced team. These acquisition-hire strategies are known as “acqui-hires,” and are a popular SaaS business acceleration strategy. Acqui-hires allow the acquiring company to pick up a promising young team that can focus on a specific missing skill set, or add more talent to an existing SaaS initiative. Examples include ’s acquisition of Identified or ’s purchase of Lettuce.
- SaaS tuck-ins: Similar to the acqui-hire strategy, larger Hybrids or SaaS companies often look for a specific capability –– analytics, security or social products –– they can quickly incorporate into their product portfolio or platform. We saw this with buying Framehawk and ServiceSource picking up Scout Analytics.
Here are some of the largest, most high-profile SaaS M&A deals for 2013 and 2014:
This list represents a cross section of the 390 SaaS deals done during 2013.
Most of the activity was generated by Elephants and Bears purchasing mid-sized Hybrids to extend their existing SaaS portfolios. Although DealerTrack bought Dealer.com, we didn’t see too much in the way of mergers of equals, in this case two Bears.
The biggest SaaS deal of 2013 was ’s acquisition of marketing vendor ExactTarget for more than $2 billion, jumping this SaaS Rhino into the marketing automation segment. and both made deals over $1 billion to extend their Hybrid product portfolios. During 2014 there have been a few large deals, but most of the action has been with smaller-sized targets.
This table provides a view into a cross section of SaaS M&A deals during 2014, with emphasis on the buyer and target company types, and the purpose of the acquisition. The various purposes are:
- Expansion of acquirers’ existing SaaS strategy, which might be to add new products.
- Expansion of the SaaS strategy, i.e., taking an ISV or systems integrator into SaaS by making a key acquisition.
- Acqui-hire, in which the buyer purchases a company primarily for the target’s SaaS team and expertise.
As valuations have continued to rise, a majority of deals involved Rabbits and Squirrels, like ’s purchase of Jaspersoft. Meanwhile, the big players continued to hunt the relatively large hybrids and SaaS companies. was active, buying TOA Technologies, Responsys and Blue Kai. Other Elephants like , and followed Oracle’s lead.
This table shows a cross section of large SaaS deals that involved taking a public company private. These now-private companies have the time and privacy to work on a SaaS/cloud transition, without the pressures of the public markets.
This is a partial representation of 390 SaaS deals completed during this period.
Looking at SaaS M&A activity over time, overall volume has slowed but there is still more activity in this market than the traditional on-premise software market. Montclare estimates that for 2014 there will be approximately twice the number of SaaS M&A deals compared to 2011. The deal volume from the middle of 2013 through the early part of 2014 flattened out, attributable to the increasing valuations of pure SaaS companies and a slow economic recovery.
Between Q1 2013 and 2014, SaaS valuations have started to steadily move up to more than 4.5x annual revenues. This increase is based on expectations being set by many of the larger SaaS deals like SAP’s acquisition of SuccessFactors (10x) or ’s purchase of ExactTarget (7x). Founders, boards and investors are now anticipating acquisitions at a minimum of 4-5x revenues, and buyers are looking hard to find quality deals at 2-3x of targets’ revenues. This mismatch of expectations appears to be one of the factors slowing the pace of SaaS M&A.
Early in 2014, public SaaS companies still received impressive valuations based on accelerated growth rates (even if they were still not delivering any profits) illustrating a clear relationship between revenue growth rates and valuations. In fact, SaaS companies that had revenue growth CAGR of at least 50% were rewarded by market multiples of up to 19x based on revenues.
Specific to profitability, unprofitable SaaS companies continued to get valuations of a remarkable 9.6x early in 2014. Meanwhile, companies that had profits in excess of 30% experienced a median market multiple of 4.3x in Enterprise Value/Revenues. This is consistent with the revenue multiples paid in SaaS acquisition activity during 2014.
When breaking down the SaaS companies by categories, valuations vary for solution areas based on public company comparables and M&A deal flow. One particularly strong segment during 2013 – 2014 has been , led by (34x multiple) and (15x), both of which are Montclare SaaS 250 leaders. Vertically focused SaaS 250 companies like and have also demonstrated strong valuations, with up to a 68.5% improvement between 2013 and 2014. and have both done well in the CRM segment, but the overall category has lagged.
We expect the larger Hybrids to continue to look for recurring revenue, technology and talent from smaller SaaS players for the foreseeable future. If SaaS valuations begin to retreat back to 4x, M&A deal flow should increase.
All SaaS companies require capital to sustain high growth rates and reach profitability. More than 70 companies on the Montclare SaaS 250 list conducted some type of fundraising between 2013-2014. For venture-backed firms in the Montclare SaaS 250, the median round size was $38 million, and $60 million for private equity or debt-based companies. The Montclare SaaS 250 also has 82 publicly traded companies that didn’t raise venture or private equity capital. Therefore, 168 companies of the Montclare SaaS 250 did not require additional funding during 2013-2014.
Venture funding: Fifty-two companies across all segments of the Montclare SaaS Kingdom received venture funding, with single rounds ranging from $1.3 million to over $100 million. Other, non-venture sources of funding included private equity and debt financing. The largest round during 2013-2014 went to Box, which raised Series G funding of $150 million with a median round size of a solid $38 million.
When we applied methodology to the companies that raised venture capital, we saw the pure SaaS animals, particularly Squirrels and Deer, receiving the majority of the funding. The larger animals, SaaS Rhinos and Hybrid Elephants, did not raise capital because these firms are either publicly traded or well capitalized.
Notably, most venture funding went to pure SaaS firms. Less is being invested in Hybrids. Investors appear to want to fund sales and marketing to spur growth at pure SaaS companies, rather than providing capital to transition ISVs or Hybrids over to SaaS. Some of the larger rounds were also used to acquire smaller SaaS companies to fuel growth and add SaaS talent, as well as new products.
Not surprisingly, we saw acquisition and IPO activity in the same categories during this period, which are covered in the next section.
In terms of destinations for venture investment, California and the Western US are clearly the most popular regions, garnering 86% of all funding rounds.
California’s dominance isn’t surprising, since the high tech venture capital community is concentrated there. Other big investments in western states included ($125 million) and ($100 million) in Utah, as well as in in Washington ($45 million).
Non-venture funding: Only 15 companies of the Montclare SaaS 250 raised capital through private equity or debt financing.
Many non-venture deals were on the larger side, with six deals valued at more than $100 million. The rest tended to be private equity firms trying to get into pre-IPO SaaS companies like ($100 million), ($60 million), ($150 million) and ($85 million). The majority of the smaller investments were debt financing, which is usually not a good sign of the health of the business.
The most active non-venture funded segments were mid-size categories: Bears, Lions and Deer. The median rounds were between $80 and $150 million for companies like ($150 million), ($150 million), and ($85 million).
Larger Collaboration and Financial deals included ($85 million), ($200 million) and ($150 million). Marketing and Platform companies also had some very large deals including ($500 million), ($450 million), ($150 million) and ($60 million).
Finally, California is also a very popular destination for private equity and banking firms; 80% of the deals they funded occurred there. However, Xero and Atlassian operate from New Zealand and Australia, respectively.
All of the major financial players in technology recognize there is a lot of money to be made by selecting the winning companies in the SaaS market. Due to the concentration of companies and the high tech financial community, the majority of the bets are being placed in California.
The SaaS IPO market in 2013 was brisk, with 13 of the Montclare SaaS 250 going public. Top offerings including (DATA), (VEEV) and (MKTO). In 2014, the IPO window narrowed and there were only 9 offerings. Still, several of these IPOs generated large valuations, including (ZEN) and (PCTY). (CSLT) exceeded $1 billion in market capitalization.
The most active animal segment for IPOs was the Lions, with 8 floating IPOs during 2013-2014. These included , , and (PAYC). The Rams and Deer were the second most active SaaS animals with 4 IPOs each. Even a Rabbit IPO, , with only about $13 million in annual revenues, has performed well and still has a market cap of over $1 billion.
The pure SaaS group had a slight edge (13) over the Hybrid companies (8) in IPOs. Still, the success of Hybrid IPOs is one indicator that the market is still interested in companies that can successfully run a combined license-and-subscription business model.
In terms of the newly public companies’ solution types, marketing, payroll and various vertical solutions were the most popular. Marketing IPOs included , (CVT) and (MRIN).
There were an unusual number of payroll IPOs; , and (BNFT) all went public during 2013-2014. Also remarkable was the number of business-to-business vertical SaaS solutions that went public. As mentioned, , a SaaS firm that helps businesses control their healthcare spending on employees, had a successful IPO in the wake of the Affordable Care Act. In the power management space, (OPWR) and (SSNI) issued IPOs.
The success of Hybrid IPOs is one indicator that the market is still interested in companies that can successfully run a combined license-and-subscription business model
Not surprisingly, California had the most IPOs (9) of any state in the US. All of the California IPOs were in Northern California. There were 3 in San Francisco: , , , 4 on the Peninsula and South Bay: , (RNG), (HIVE), , and 2 companies in the East Bay: , (FIVN).
Virginia was the only other state that had more than 1 SaaS IPO during 2013-2014, including and . Nine other states that each had one SaaS IPO include:
3 in the Western US: (RALY) from Colorado, from Washington, and from Oklahoma2 in the Midwest: from Illinois and (COVS) from Detroit7 on the East Coast: and from Virginia, 2U (TWOU) from Maryland, (ECOM) from North Carolina, from South Carolina, and (BRDR) from New York.
Two non-US SaaS firms –– (ADR) from South Africa and (HGN) from Canada –– both went public in 2013. As the activity clearly reveals, the vast majority of all of venture funding occurs in California.
Most of the 22 companies that went public during 2013-2014 were not profitable, but were growing at an attractive enough rate to receive large valuations. Many of the companies that were small when they went public, including (CSOD), (NOW) and (WDAY), are all much bigger, enjoying very high stock prices and valuations due to their superior growth rates and business models.
In 2013-2014, the SaaS business model expanded significantly beyond North America. We see expansion in Europe, the Asia Pacific region and Latin America. North America is still the predominant region, as measured by both SaaS companies and market size, but Europe is now starting to accelerate. The European market is behaving similarly to the post-2008 US market, when software buyers began to adopt SaaS solutions at a very rapid rate.
As indicated by recent global SaaS market data, many countries in all regions are seeing their SaaS markets accelerate much faster than their enterprise software or ISV counterparts. In Asia Pacific, companies like (Japan) are launching, and some established Hybrid firms like , and are gaining momentum.
In Europe, the Western and Northern countries are experiencing strong SaaS growth, and Eastern countries like Poland are seeing positive expansion. Companies including , , , , , , and are gaining significant traction in Europe with their SaaS offerings. Although there is little SaaS movement in Southern Europe, which is still mired in a recession, companies including Spain’s and NTRGlobal made the Montclare SaaS 250 this year.
North America still leads the SaaS movement and the US continues to be the largest market. Canada is experiencing brisk SaaS market growth and should continue to have a number of companies in the Montclare SaaS 250 over the next few years. Some of these Canadian companies include , , and .
Despite a high CAGR of over 25%, Latin America is still slow to adopt SaaS. This may be due to relatively low Internet penetration, government privacy concerns or simply more conservative business practices. One company in this edition of the Montclare SaaS 250, , is from Brazil. Based on promising smaller companies emerging in Chile and Colombia, we hope to see more Latin American firms in the next edition of the Montclare SaaS 250.
In Europe the two countries leading SaaS growth are the UK and France. The UK includes notable companies such as , and . In France, we see leaders such as and . In Asia Pacific, India has greater than 100% SaaS CAGR with firms like , , and . Australia and New Zealand are hosts to strong SaaS growth as well, including companies like , , , and .
One development that will almost certainly hamper North American players’ entry into Europe is a stiffening of data privacy laws. This may allow local providers to gain an advantage in larger European markets including Germany and France.
North America is still the predominant region, as measured by both SaaS companies and market size, but Europe is now starting to accelerate
This year’s report illustrates how the SaaS market is growing not just globally, but also across all regions of the United States. Throughout the US, more companies are moving to incorporate some type of SaaS into their business model. The western US is home to more than two-thirds of all SaaS companies in the US, while the east coast has nearly one-fourth of all SaaS and Hybrid companies.
Similar to the last edition of the Montclare SaaS 250, the majority of US SaaS companies are located in California (56.9%). 95% of those companies are located in the San Francisco Bay Area. The convergence of SaaS talent, access to capital and entrepreneurial enthusiasm fuels the creation and growth of a significant number of SaaS companies in California.
Within the Bay Area, San Francisco proper has 35% of the area’s SaaS companies, while the Peninsula is home to almost 38% of regional SaaS companies. What is even more impressive is that the 101 companies in the San Francisco Bay Area represent 50% of all SaaS companies in the US, and 40% of all the SaaS companies globally. This is consistent with the findings contained in previous editions of the Montclare SaaS 250: California continues to be the epicenter of SaaS.
That being said, although California may host a vast expanse of the Montclare SaaS Kingdom, there is a significant increase in SaaS firms thriving in lower-cost western states as well. Between 2012 and 2014, Utah saw both and raise more than $100 million each to scale their businesses. In Washington there are innovative companies including , and raising large capital rounds and going public. Even is launching new Cloud products. Further south, Texas is creating Cloud momentum with companies like , , and .
The 101 companies in the San Francisco Bay Area represent 50% of all SaaS companies in the US, and 40% of all the SaaS companies globally
The Midwest is showing new signs of life, with several states putting companies onto the Montclare SaaS 250. Hybrid companies including in Missouri, pure SaaS company in Tennessee, Michigan’s , which went public in 2013, and in Ohio raised a large round of funding in 2013. was acquired by in August 2014.
Perhaps an extension of its Route 128 legacy, Massachusetts has the second most SaaS companies of any state (16), second only to California. Pure SaaS players like ; and are based in and around Boston. A number of Massachusetts-based, very large Hybrids have begun to shift some of their solutions to the Cloud, including , , and .
Also in the northeast, New York and New Jersey are home to a number of Hybrids and SaaS companies including Elephants , , and . Also in the same geographical area you will find pure play firms including , , and . Maine joins the Montclare SaaS 250 for the first time with pure SaaS firm .
In the Mid-Atlantic region, Virginia led the way with five SaaS firms including two companies that recently went public: and . Also in the area are government-focused and . Washington, DC is home to education-based , while Maryland has , provider of higher education solutions, and , which was taken private. Pennsylvania lays claim to the US headquarters of , division and .
The Southeast region had the fewest SaaS companies in the US. Infor, formerly headquartered in Georgia, has moved to New York City, and Georgia is no longer represented on the Montclare SaaS 250. Florida continues to be the home of several very big SaaS names, including , and , which was acquired by Skillsoft in August 2014. The Carolinas continue to produce some well known SaaS companies, including several that went public in 2013-2014: , and .
Before we delve into more detail around this year’s Montclare SaaS 250 companies, let’s first take a few steps back and look at the big picture: What does it all mean?
Here’s what the numbers show us. The companies that made the list demonstrated they are a major force in economies and societies worldwide. During 2013, the Montclare SaaS 250 companies generated $798 billion in SaaS revenue, invested more than $70 billion back into research and development, and employed an ample workforce of over 2 million people – the equivalent of more than twice the population of San Francisco.
While all the firms in the Montclare SaaS 250 are remarkable, it is interesting to look at facts gleaned from our data. Here’s how a typical company stacks up, based on averages derived from the data we collected on candidate companies. It is important to note that this company profile is derived from a wide range of data points, including input from the Montclare Animal Kingdom methodology.
Revenue: The median SaaS 250 company generates $90 million in annual revenues by providing a selection of IT and related services, while selling software and hardware products. Of the $90 million, $45 million (49.6%) is generated by SaaS offerings. Since the companies that comprise the Montclare SaaS 250 are innovative technology leaders, the average firm invests significantly to stay competitive. It puts over $12 million, or more than 13.6% of its total revenue, into improving existing offerings and developing next-generation products and services.
Workforce: The median Montclare SaaS 250 company employs a workforce of 531 employees.
Social sentiment: Montclare SaaS 250 companies are some of the world’s most adept at using social media and networks for sales and marketing purposes. The average Montclare SaaS 250 company has amassed more than 7,000 followers on Twitter and almost 6,000 followers on LinkedIn.
Their history: Montclare SaaS 250 companies that have a pure SaaS business model have been in business for at least 11 years. A composite Montclare Hybrid company would have first invested about 9 years into developing and offering other products and services before broadening its portfolio with SaaS.
Montclare's research team continually improves our processes and the quality of this unique industry report. Our latest research utilizes a new, comprehensive approach for gathering this very hard-to-find data, filling in the gaps and providing a clean data set. The process of acquiring accurate data and translating it into a useful product for a discerning audience is laborious and requires significant industry expertise.
- Data Gathering: Montclare evaluated over 1,000 SaaS, Hybrid and ISV companies globally. Data was gathered using a bottom-up research approach. Many companies nominate themselves for inclusion and provide data, which is also considered during the development of our data set.
- Data Cleansing: All data is cleaned through several verification and validation processes. Secondary research is performed to complete any gaps in data sets or to address any outliers. Each candidate company is represented by approximately 60 independent and calculated values.
- Algorithm Application: 20 data points on approximately 500 candidate companies are submitted to our proprietary algorithm. Each data point is uniquely weighted and data relationships are carefully reviewed. The result is a ranked order of all companies.
- Segmentation: The ranked data set is then segmented into a variety of charts and data visualizations. We reveal companies by revenues, solution type, company type and many others. We also provide insights including applying our proprietary methodologies, such as the Montclare Animal Kingdom segmentation.
- Interpretation: The finalized data and segmentation is invaluable when explained within the context of other industry events. Montclare is constantly studying the global SaaS market and its players, cross-checking data to ensure our analysis and deductions are substantiated by facts.
To be a candidate for the Montclare SaaS 250, companies must meet a set of minimum criteria that has remained constant requirements since our first publication.
- Minimum $5 million USD Annual Recurring Revenue (ARR)
- Operating as a business for at least 3 years
- Provides solutions exclusively (or nearly exclusively) to businesses (B2B software)4
- Provides a generally available Software-as-a-Service solution.
The most significant request we received from readers of previous editions of the Montclare SaaS 250 was to generate a ranking of the companies featured, with the most successful SaaS companies listed at the top. Revenue is only one indicator; our experience working closely with many SaaS and Hybrid companies indicates there are many measures of success.
To deliver an insightful and accurate ranking, Montclare was not only required to capture more data on each company, but also to build an algorithm that would accurately and fairly appraise each company in the context of its peers.
Although we gather 60 data points on each company, only 20 of them are used to represent each company in our algorithmic calculation. The Montclare algorithm applies varying weights, relationships and other proprietary considerations to generate the ranked list.
A partial list of areas we research include
(4) Certain Montclare SaaS 250 companies, such as Adobe and Dropbox, have a significant consumer customer base. However, the majority of these consumers use the companies’ products for business purposes.
1Salesforce.com
2LinkedIn
3Dropbox
4Workday
5Google
6NetSuite
7Box
8New Relic
9Marketo
10Zendesk
The Montclare SaaS 250 Top 10 is based on the Montclare Index Score derived from our proprietary industry methodology. The score is the result of 20 data points on each company to determine their stature and significance from a SaaS business model perspective.
The top ranked company for this year’s Montclare SaaS 250 is Salesforce.com, the global cloud CRM market leader.
Some of the highlights that have placed Salesforce.com at the top of this year’s list include:
- Highest level of pure SaaS revenues (largest pure SaaS company)
- Dramatically high growth rate, even at over $3 billion in annual subscription revenues
- Dominant market position in CRM, Marketing and Customer Service
- Is innovative, with new products like the Salesforce1 and Force.com platforms; was recognized as America’s most innovative company by Forbes magazine
- Significant SaaS acquisitions including ExactTarget, Radian6, Pardot and Heroku
- Was the industry’s first true SaaS pioneer
Mark Benioff, Chairman and CEO
San Francisco, California
The second highest ranked SaaS company on this year’s list is LinkedIn, the social business-networking giant.
Interesting facts that helped place LinkedIn close to the top of the list are:
- Very fast growth rate
- High levels of innovation around their cloud platform
- Efficient management of a user community over 300 million members globally
- Over $1 billion in recurring revenues
- 2 new members join LinkedIn per second
- Global expansion
Jeff Weiner, CEO
Mountain View, California
Dropbox, one of the leading cloud storage companies, as well as one of the fastest growing SaaS companies in the world, takes the third position on our list.
Key facts include:
- 300 million users
- Supports 19 languages and users in more than 200 countries around the globe
- Significant fundraising of over $400 million in 2014
- Highly efficient and scalable platform
- Frictionless sales model
Drew Houston, Co-founder and CEO
San Francisco, California
At number four we have another leading SaaS enterprise ERP software player: Workday.
Key facts:
- Highly innovative platform and user experience
- Spends more than 20% on R&D annually
- Largest pure play SaaS ERP provider
- Received the highest score among our industry thought leaders
- Very high growth rate
Aneel Bhusri, CEO
Pleasanton, California
Rounding out the top five is Google, the leading provider of search, advertising, platform and small business solutions.
Key facts:
- Started their B2B offerings with their freemium email solution Gmail
- More than 5 million business customers
- Highly innovative cloud platform and data center capabilities
- Largest market cap of any of the Top 10 SaaS companies: $390 billion
- Less than 10% of Google’s revenues are non-search based solutions
Larry Page, CEO and Co-Founder
Mountain View, California
In the 6th position is NetSuite, the company formed by ex-Oracle executives who wanted to deliver ERP and eCommece solutions using a SaaS business model.
Key facts:
- Offer ERP solutions related to finance, eCommerce, HCM and CRM
- Spend almost 13% on R&D
- Strong growth rate, 30% CAGR
- Just entered HR market with acquisition of TribeHR
Zack Nelson, President and CEO
San Mateo, California
Box, the cloud storage company, is the leading B2B cloud file sharing and storage company.
Key facts:
- Used by more than 240,000 companies globally
- Innovative cloud storage products
- Raised a pre-IPO round of $150 million
- Market capitalization exceeds $2,4 billion
Aaron Levie, Co-Founder and CEO
Los Altos, California
New Relic is the fastest growing SaaS company on our SaaS 250 list. The founders of Wily Technology, acquired by CA, started this cloud application performance monitoring company.
Key facts:
- Used by more than 200,000 users
- Used to monitor the performance of 100 million mobile devices
- 90,000 customers
- 200 billion data points monitored every day
- Raised a $100 million round of funding in 2014
Lew Cirne, CEO and Co-Founder
San Francisco, California
Marketo is the leading independent provider of SaaS marketing solutions on the Montclare SaaS 250 list.
Key facts:
- Used by more than 3,350 businesses
- Greater than 50% CAGR growth for the past four years
- Innovative company, with almost 20% R&D investment in 2013
- Significant investment in marketing and sales: 60% of revenues
- IPO in 2013
Phil Fernandez, Chairman, President and CEO
San Mateo, California
The number 10 position goes to Zendesk, the leading SaaS-based Customer Service provider.
Key facts:
- Very fast growing SaaS company, with greater than 75% CAGR
- More than 45,000 customers
- Started in Copenhagen but now based in San Francisco
- IPO in 2014
Mikkel Svane, Chairman, CEO and Co-Founder
San Francisco, California
1Workday
2Dropbox
3Concur Technologies
4Zuora
5Evernote
6GoodData
7Huddle
8Salesforce.com
9LinkedIn
10NetSuite
We define the hottest companies of the Montclare SaaS 250 as those that have demonstrated significant advances in both growth and innovation. In addition to factoring in revenue and innovative products, this category is also influenced and defined by opinions from industry thought leaders.
- Object oriented platform
- Innovative, easy-to-use interface
- Three releases per year
- Built a suite of robust HCM, Finance, Payroll, Talent Management solutions in record time
- Leader in deploying SaaS solutions to the largest corporations in the world
- Significant scaling of their paid business customer base to 80,000 companies
- Frictionless sales and customer success models Scalable, Amazon (AWS)-based platform infrastructure
- 15,000 business customers
- Over 15 million business travelers use Concur’s travel and expense platform
- Original company to transition their business from on-premise to SaaS
- Over 100 million users worldwide
- Has been a leader in developing social marketing solutions based on their Radian6 and Buddy Media acquisitions
- Leader in Platform-as-a-Service solutions including Heroku and Force.com
- Re-wrote their business social networking platform while in production, as it was supporting over 100 million users globally
- Invented a new development environment to support the rewrite of their SaaS platform
1Dropbox
2Box
3New Relic
4Adaptive Insights
5DocuSign
6SurveyMonkey
7Elance/oDesk
8Atlassian
9Hubspot
10ON24
Montclare SaaS 250 Growth Companies are those that have recorded significant growth in their revenues, customer bases, or funding over the last 12-18 months.
- Raised over $1.1 billion in total funding
- Achieved revenues of $200 million in 2013, from inception in 2007
- Supports over 200 million users
- Raised most recent funding round of $150 million in 2014
- Supports over 20 million users and 180,000 businesses
- Company founded in 2005
- Filed for IPO
- Used by more than 200,000 users
- Used to monitor the performance of 100 million mobile devices
- 90,000 customers
- 200 billion data points monitored every day
- Raised a $100 million round of funding in 2014
- Raised $150 million in April 2014
- Supports more than 35,000 customers
- Headquartered in Sydney, Australia
- Grew at a rate of 44% CAGR in 2014
- Raised no money in 2013 or 2014
- Supports more than 11,000 customers globally
- 1,500 agency partners
- 400,000 followers on Twitter
1Workday
2New Relic
3Tableau Software
4Adaptive Insights
5Zscaler
6Anaplan
7Birst
8AppDynamics
9Salesforce.com
10Huddle
The 10 Most Innovative Companies list is based on the company's unique products, user experiences, technology architectures, or significant value as perceived by their customers. This ranking is based on a combination of Montclare-acquired industry data and input from our advisory group of industry thought leaders.
- User interface, ease-of-use
- Rapid deployment of new products and features
- Make complex simple
- CEO is a breakthrough innovator in the application monitoring market
- Practical and interactive data visualization tools
- Started out of Stanford’s Department of Computer Science
- NOTE: Montclare uses Tableau’s tool, and the Montclare SaaS 250 report uses the visualizations it generates
- Invented new business process modeling language and tool
1Salesforce.com
2LinkedIn
3Workday
4Google
5NetSuite
6Marketo
7Zendesk
8Cornerstone OnDemand
9Concur Technologies
10Constant Contact.
The list of Top 10 Public SaaS Companies is derived from the Montclare Index Score, with the initial requirement that the company be publicly traded no later than May 15, 2014.
- Went public on June 23rd, 2004
- Market Cap $36 billion
- New York Stock Exchange: CRM
- Went public on May 19th, 2011
- Market Cap $27 billion
- NYSE: LNKD
- Went public October 12, 2012
- Market Cap $17 billion
- NYSE: WDAY
- Went public on August 19, 2004
- Market Cap $390 billion
- NASDAQ: GOOG
- Went public on December 20, 2007
- Market Cap $6.7 billion
- NYSE: N
- Went public on May 17, 2013
- Market Cap $1.38 billion
- NYSE: MKTO
- Went public on May 15, 2014
- Market Cap $1.7 billion
- NYSE: ZEN
- Went public on March 17, 2011
- Market Cap $2.3 billion
- NASDAQ: CSOD
- Went public on December 16, 1998
- Market Cap $6.2 billion
- NASDAQ: CNQR
- Went public on October 3, 2007
- Market Cap $930 billion
- NASDAQ: CTCT
1Dropbox
2Box
3New Relic
4Adaptive Insights
5Zuora
6DocuSign
7Lithium Technologies
8SurveyMonkey
9Evernote
10Elance/oDesk
A counterpart to the Public list, the Top 10 Private Companies list identifies leading private companies with the highest Montclare Index Score. Since private companies are not obliged to disclose business information, we leverage information they have voluntarily provided, or forecasts, projections and estimates by industry specialists.
- Filed for $250 million IPO in March 2014
- 2013 revenues were approximately $124 million
- 25 million registered users
- Over 100% CAGR during 2013
- Over 2,200 customers
- Raised $45 million in March 2013
- Went public on December 20, 2007
- Market Cap $6.7 billion
- NYSE: N
- Raised $84 million in March 2014
- 105,000 paying customers
- 3.5 million documents are DocuSigned every day
- DocuSign used in 188 countries
- Raised $800 million in private equity funding in January 2013
- 100% of the Fortune 100 use SurveyMonkey
- Manages more than 2 million survey responses every day
- 20 million people use SurveyMonkey’s platform
1Oracle
2athenahealth
3Intuit
4Adobe Systems
5Citrix
6Ultimate Software
7Cisco Systems
8SAP
9Tableau Software
10Elance/oDesk
The Top 10 Hybrid Companies list comprises organizations offering both SaaS and on-premise software solutions.
- Has acquired a number of leading SaaS companies including RightNow, Taleo, Eloqua, Responsys and BigMachines
- Offer Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) solutions under the Oracle Cloud
- Q4 2014 SaaS and PaaS revenues surpassed $320 million
- Oracle claims to be the second largest Cloud-SaaS company
- 2013 revenues of $595 million
- Support over 55,000 medical providers with their athenaNet platform
- Posted client collections of over $11 billion
- Strong growth of 41% CAGR for 2013
- Intuit is shifting its model to SaaS and realized QuickBooks Online CAGR of 40% during 2014
- 30 million customers are using Intuit cloud-based offerings
- QuickBooks Online grew 150% outside of the US in 2014
- Small Business Annual Recurring Revenues (ARR) grew by 34%
- 2.3 million Creative Cloud subscriptions
- $1.14 billion in cloud-based ARR
- Q2 2014 added 464,000 Creative Cloud subscriptions
- Growth of Creative Cloud was 23% CAGR
1Salesforce.com
2Google
3Microsoft
4IBM
5Atlassian
6Synchronoss
7Anaplan
8Oracle
9Informatica
10VMware
Montclare’s Top 10 Platform-as-a-Service (PaaS) companies combine hosted infrastructures, development tools and business services into platforms and offer them through the cloud to developers and customers. These platforms are used as a foundation to build their own specific SaaS products and services.
- Over 800 Independent Software Vendors (ISVs) have built their products on the Force.com platform
- The Force.com platform powers 150 million transactions per day
- Veeva was the first Force.com ISV to go public in 2014
- Heroku supports more than 20,000 live websites
- Launched Cloud Platform for Startups program, offering qualifying companies $100,000 of free platform services for a year
- Have < 100 customers on their Google Cloud Platform
- Offers elastic scalability and pricing like the Amazon Web Services (AWS) Infrastructure-as-a-Service (IaaS) platform
- Microsoft Azure offers both PaaS and IaaS
- Offers data centers in North America, South America, Europe, Asia, Japan and Oceania
- Renamed Microsoft Azure in 2014
Montclare reviewed more than 1,000 ISVs globally to generate this year’s Montclare SaaS 250. Many companies which do not appear in this edition had intriguing characteristics we believe make them likely candidates for future Montclare SaaS 250 lists. In some cases, these companies “vital statistics” put them just below the 250 cut-off range. All of Montclare’s Companies to Watch show future promise through their product and service offerings, growth, or the way they approach and operate in the SaaS market.
* Companies listed in alphabetical order, not by Montclare Score
For questions on the Montclare SaaS 250 or our company, we welcome you to contact us at any time.
By Emailinfo@montclare.com
By Phone+1 (855) SAAS-250 (722-7250)
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