Information contained on this page is provided by an independent third-party content provider. WorldNow and this Station make no warranties or representations in connection therewith. If you have any questions or comments about this page please contact email@example.com.
SOURCE Software & Information Industry Association
Annual Study Finds SaaS Driving Largest Revenue Gains, and Indications of Growth Outside Silicon Valley, Massachusetts & Other Traditional Tech Centers
WASHINGTON, Oct. 17, 2013 /PRNewswire-USNewswire/ -- Small and mid-sized companies in the U.S. software industry are thriving in the post-recession economy, with software-as-a-service (SaaS) firms consistently experiencing the greatest revenue growth and hiring expectations, according to a study released by the Software & Information Industry Association (SIIA), the principal trade association for the software and digital content industries.
The 2013 Software & SaaS Financial Benchmarking Industry Report was produced by SIIA partner OPEXEngine, the leading aggregator of financial and operating benchmarks for small- and mid-sized software companies. To complete this seventh annual report, OPEXEngine surveyed several hundred private and public U.S. firms with revenues between $1 million and $450 million.
The report finds that the entire small and mid-sized U.S. software industry continues to experience strong growth, however SaaS firms are consistently experiencing the greatest revenue growth and hiring expectations in today's post-recession economy. According to the study, private SaaS firms experienced average revenue growth of 35 percent in 2012, edging higher than the 30 percent achieved by private software firms. In addition, 2012 revenue growth for private SaaS companies was more than twice that of on-premises software companies. Public SaaS firms averaged 25 percent revenue growth in 2012, but the top quartile had a median of 48 percent growth.
While hiring expectations were also strong for private small and mid-sized firms, SaaS companies demonstrated a slightly more significant commitment to job growth. According to the study, private companies plan to increase employee headcount in 2013 by an average of 26 percent – continuing a positive hiring trend benchmarked at the same rate last year – with private SaaS companies averaging closer to 30 percent planned growth in headcount for 2013.
"The software resurgence continues, with small and mid-sized software firms exhibiting some of the strongest post-recession growth rates of any sector in the U.S.," said Rhianna Collier, Vice President of SIIA's Software Division. "The study also demonstrates that the face of the industry is shifting, now more than ever, from on-premises firms to SaaS. The greatest gains now unquestionably belong to SaaS firms, which are leading a software industry expansion across the U.S."
OPEXEngine also noted that more companies outside traditional tech centers on the East and West coasts participated in this year's study. This data allowed OPEXEngine to, for the first time, compare software firms based in the Central and Mountain regions to their counterparts based in Silicon Valley, Boston and elsewhere. The increased participation also offers a strong indication that there is considerable software industry growth taking place in these non-traditional regions.
"The rise of SaaS, with its remote cloud-based access, appears to be allowing for the establishment of more firms outside major tech centers," said Lauren Kelley, CEO and founder of OPEXEngine. "For the first time in seven years conducting this report, we see clear indications that companies are no longer restrained by proximity to the traditional coastal centers of human or financial capital. The expansion of SaaS appears to be contributing to a geographic expansion for the software industry."
In comparing software firms in different geographic regions, OPEXEngine found that private West Coast firms experienced an average revenue growth rate of 53 percent in 2012, compared to 30 percent for East Coast firms and 25 percent for those in the Central and Mountain regions. Venture-backed firms had the highest growth among private firms, regardless of location with median 47 percent revenue growth last year, versus 13 percent for the non-venture backed firms. Profit metrics, however, were better for Central and Mountain companies than for companies located on the East Coast, but not as strong as profit metrics for West Coast companies.
Key findings from the 2013 Software Benchmarking Industry Report include:
- Private firms expect to increase headcount by an average of 26 percent. The biggest hiring increases are expected by firms with revenue under $10 million (35 percent) and between $10 and $20 million (26 percent).
- Private software firms achieved an average revenue growth rate of 31 percent in 2012, compared to 37 percent in 2011 and 28 percent in 2010.
- Private companies in the $20-$40 million range had the highest revenue growth rate (median 55 percent), compared to 46 percent in 2011.
- Public companies under $450M experienced a median revenue growth rate of 22 percent, and expect to increase headcount by an average 20 percent in 2013.
- Public companies in the top quartile showed a median of 48% revenue growth in 2012 over 2011.
- Private SaaS companies fared much better than private on-premises software companies, experiencing a median revenue growth rate of 35 percent, compared to 16 percent for on-premises firms.
- Median revenue growth rates were higher for West Coast companies – 53 percent versus 30 percent for East Coast companies and 25 percent for Central and Mountain companies.
- West coast private firms utilized the most venture funding, having taken an average of $53.5M, while East firms averaged $37.3M and Mid-West/Mountain region private firms averaged $11.4M venture funding.
The 2013 Software & SaaS Financial Benchmarking Industry Report provides extensive financial and operating metrics for U.S.-based companies with 2012 revenues of between $1 million and $450 million. Benchmarks cover key financials, including detailed expense ratios, revenue and profit metrics, geographic break-outs, employee statistics, as well as customer and sales model comparisons. The report also looks specifically at Software-as-a-Service (SaaS) vendors and breaks out all the benchmarks for smaller, private SaaS companies as well as for larger, public, SaaS companies. The 2013 report is the seventh annual benchmarking of the software industry conducted by OPEXEngine.
The 2013 Software & SaaS Financial Benchmarking Industry Report is available for purchase at www.opexengine.com.
SIIA is the leading association representing the software and digital content industries. SIIA represents approximately 800 member companies worldwide that develop software and digital information content. Information technology (IT) and software security are critical issues to SIIA's members, many of whom strive to develop safe, secure and state-of the-art products that effectively serve their commercial and government customers alike, while protecting their intellectual property. The SIIA Software Division provides a forum for companies developing the applications, services, infrastructure and tools that are driving the software and services industry forward. For further information, visit www.siia.net/software.
OPEXEngine is the industry leader in delivering financial and operating benchmarks for the technology industries. OPEXEngine's benchmarking reports are key tools used by senior operating executives to support the budgetary, strategic planning and investment process. In addition, OPEXEngine's On Demand Financial Insights Reports deliver company and industry comparisons in the areas of valuations, revenues, cost and expenses, profitability, employee productivity and cash management for any US public company, created on the fly in minutes. For further information, visit www.opexengine.com.
Contact: Beth Dozier, +1 202-429-1833, firstname.lastname@example.org
OPEXEngine Contact: Christine Dunn, +1 617.484.1660, email@example.com
©2012 PR Newswire. All Rights Reserved.