You’ll remember how I predicted that our SaaS stocks would be a safe haven, a welcome port in a storm. Many of our group, like Gaucho Chris who found this report, agreed. A big thanks to Chris!
Zuora, a company which provides support for subscription companies, produced the following report on the effect of the Pandemic on SaaS companies. You’ll be astounded at how correct we were:
“COVID-19 Subscription Impact Report
The worldwide spread of coronavirus (COVID-19) has had a quick and damaging effect on the global economy. However, amongst operational disruptions, supply chain restrictions, and a global recession, subscription businesses are proving to be resilient
In an analysis of hundreds of subscription-based companies, more than half have not seen an impact on their subscriber growth, while one quarter are actually seeing subscriber acquisition rates accelerate even faster than before. And, of the remaining companies who are seeing their growth slow, half of those are still growing….
Subscription companies prove their resilience. Overall,
22.5% of companies are seeing their subscription growth rate accelerate,
53.3% of companies have not seen a significant impact to their subscriber acquisition rates.
12.8% of companies are seeing slowing growth, but are still growing, and the remaining
11.4% of companies are starting to see subscriber churn outpace their subscriber acquisition rates.
Of the companies Accelerating, Slowing, and Contracting, we found trends across industries:
• Accelerating: OTT Video Streaming, Digital News & Media, E-Learning, Communications Software
• Limited Impact: B2B & B2C Software, Information Services
• Slowing: Consumer IoT, Business IoT Services, Software for Small Businesses, Memberships
• Contracting: Travel & Hospitality, Sports Related Services"
At the end of my March End of the Month Summary, I wrote:
This last quarter the average growth rate for my six stocks, which make up all of my portfolio, was 70%. (If you don’t believe me, calculate it yourself). Even if they slow down more than I expect, it’s hard to see the six companies with an average revenue growth rate of less than 35% to 40%, especially since Zoom and Crowdstrike are two of the companies. So I would guess that that may make make our companies very desireable to any mutual fund or hedge fund portfolio manager who wants to show good results for the year.”
I may have been way too conservative!
A link to the Knowledgebase for this board is in the Announcements panel that is on the right side of every page on this board.
For some additions to the Knowledgebase, bringing it up to date, I’d advise reading several other posts linked to on the panel, especially “How I Pick a Company to Invest In,” and “Why My Investing Criteria Have Changed,” and “Why It Really is Different.”