Publicly Traded SaaS Companies: A Guide to the Industry

Publicly traded SaaS companies are a fascinating group, with over 200 listed on major exchanges worldwide.

The largest SaaS company by market capitalization is Salesforce, valued at over $200 billion.

Many publicly traded SaaS companies have been around for decades, with some dating back to the 1990s, such as Oracle and Microsoft.

The SaaS industry has experienced rapid growth, with revenue increasing from $10 billion in 2009 to over $150 billion in 2020.

Related reading: Publicly Traded Companies Financial Statements

SaaS stands for Software as a Service, which means that companies provide software applications over the internet, eliminating the need for users to install and maintain the software on their own devices.

This model allows users to access software applications from anywhere, at any time, as long as they have an internet connection.

SaaS companies host the software on their own servers, which are typically located in data centers around the world.

This approach reduces the need for users to invest in expensive hardware and software, making it a cost-effective option for businesses and individuals alike.

Some SaaS companies, like Salesforce, offer a wide range of applications, including customer relationship management, marketing automation, and sales forecasting.

These applications can be tailored to meet the specific needs of each user, making SaaS a highly customizable option.

SaaS companies typically use a subscription-based model, where users pay a recurring fee to access the software.

This fee can be based on the number of users, the amount of storage space needed, or the level of support required.

By offering a subscription-based model, SaaS companies can generate recurring revenue and build a loyal customer base.

SaaS companies like Dropbox and Google Drive have revolutionized the way people store and share files online.

These companies have made it possible for users to access their files from anywhere, at any time, using any device with an internet connection.

The benefits of SaaS are numerous, but let's focus on the key advantages that make it an attractive option for publicly traded SaaS companies. One of the main benefits is the cost reduction it offers. By paying on a month-to-month basis, customers can save money compared to the traditional licensing model.

Hosting the software application centrally and delivering it over the Internet frees the customer from the burden of having to install, configure, deploy, maintain, and operate the technology with their own corporate IT team. This is a huge time-saver for businesses.

Faster upgrades are another significant advantage of SaaS. New software releases are deployed regularly by the software vendor, resulting in the user community gaining access to newer functionality faster than if they were waiting on the corporate IT team to deploy upgrades.

Some of the most well-known SaaS companies include Adobe, Asana, Box.com, Docusign, Hubspot, Intuit, Salesforce.com, ServiceNow, Shopify, and Workday. These companies offer a range of applications and services, from creative design and marketing to productivity and collaboration.

These SaaS companies have gained significant market value, with some of them being valued at over $74 billion. For example, Snowflake Inc. has a market capitalization of $74.26 billion, making it one of the most valuable SaaS companies.

Other notable SaaS companies include Veeva Systems Inc., which provides cloud-based solutions to companies in the pharmaceutical and life sciences industries, and Slack Technologies, Inc., known for its platform Slack, which allows internal instant messaging, video conferencing, and intelligent productivity bots.

Some of the top SaaS companies include:

These companies have reported significant revenue growth, with Slack Technologies, Inc. reporting a 43% increase in total revenues for their fiscal year 2021.

As a leader in the SaaS industry, it's essential to understand the key metrics that drive financial success. Annual Recurring Revenue (ARR) is a crucial metric for publicly traded SaaS companies, as it provides a clear picture of their revenue stream.

To achieve high ARR, SaaS companies often implement usage-based pricing, which charges customers based on their actual usage of the product. This approach can lead to higher revenue and better customer satisfaction.

Net Revenue Retention (NRR) is another critical metric that measures the percentage of revenue retained from existing customers over time. A high NRR indicates a strong customer base and a successful business model.

Subscription billing is a key component of SaaS finance, as it allows companies to easily manage recurring payments and invoices. This process can be streamlined using specialized software, making it more efficient and cost-effective.

Here are some key SaaS finance metrics to keep in mind:

M&A Activity is on the rise, with SaaS deals projected to account for over 65% of all software deals in 2024.

SaaS M&A is expected to reach 2,000-2,100 transactions this year, making it the third-highest year on record.

In Q3 2024, SaaS M&A deals reached a new high, with 594 transactions, a 20.5% increase from Q2 and a 13.8% increase from Q3 2023.

Q3 2024 was the busiest quarter since Q1 2022, and the second most active quarter on record.

M&A multiples generally held steady in Q3 2024, with in-quarter median and average multiples at 4.9x and 5.7x, respectively.

Vertically focused businesses made up 43% of all SaaS deals in Q3 2024, with healthcare leading the way at 14% of these deals.

Publicly Traded SaaS Companies have seen significant growth in recent years. The top quartile of the SEG SaaS Index by stock price saw an average increase of 39% YTD.

Some of the most valuable publicly traded SaaS companies include ServiceNow, Inc. and Workday, Inc. ServiceNow, Inc. has a market capitalization of $109.85 billion and provides cloud-based automation solutions to help enterprises automate repetitive tasks.

Workday, Inc. has a market capitalization of $56.2 billion and helps businesses manage their human resources, finances, strategy, data, and more. Its products include a variety of tools designed to assist in managing processes.

Here are some of the top publicly traded SaaS companies:

The public market for SaaS companies is thriving, with a significant increase in deals and valuation multiples.

Over 120 publicly traded B2B software companies make up the SEG SaaS Index, providing a comprehensive analysis of stock prices, financial data, and valuation performance.

The top quartile of the index by stock price saw an average increase of 39% YTD.

The median EV/TTM Revenue multiple of the Index was 5.3x in 3Q24, while the upper quartile reached a median of 9.3x – a significant 75% premium over the total Index median.

Here are some of the top publicly traded SaaS companies, along with their market capitalization and ranking:

These companies are leaders in their respective fields, offering a range of solutions for businesses and organizations.

Square is a publicly traded SaaS company with a market capitalization of $108.15 billion.

This places it at the 7th spot in our list of publicly traded SaaS companies.

Square offers innovative digital payment solutions that enable businesses to manage their online stores.

Its merchant services cater to businesses of all sizes, providing them with the tools they need to succeed.

Square's innovative solutions have made it a leader in the SaaS industry, with a market capitalization that reflects its success.

A unique perspective: Black Owned Publicly Traded Companies