One year after reporting that private U.S. software companies saw the largest revenue gains since the recession of 2008, the 2015 Software & SaaS Industry and Benchmarking Report shows even greater acceleration in topline growth. Announced today, the report also shows that small- and mid-sized software companies plan to increase hiring faster than they have in previous years.
To produce the annual report, SIIA the principal trade association for the software and digital content industries collaborates with its partner OPEXEngine, the leading aggregator of financial and operating benchmarks for small- and mid-sized software companies. For this ninth annual report, OPEXEngine surveyed more than one hundred primarily private (22 percent are public) business-to-business software and SaaS (Software as a Service) companies with revenues between $3 million and $300 million.
This year’s report confirms that the recent financial gains are more than just a short-lived bump. The software industry continues to see healthy revenue growth and, importantly, the level of growth is accelerating and leading to more jobs. With small- and mid-sized software companies showing such strength, it’s not surprising that significant levels of venture capital are flowing into their operations.
“This year’s benchmarking report portrays both extraordinary revenue growth and expansion in the functions associated with rapid growth,” said Lauren Kelley, CEO and founder of OPEXEngine. “CFOs tell me they are constantly in planning mode and having to adjust and prepare for expanded numbers of employees and customers. While these things bring their own challenges, they are obviously good problems to have and strong signs for the industry’s future.”
Among the key findings:
- Strong annual revenue growth. The leading companies in the survey (top 25 percent by revenue growth) report topline gains of 150 percent (full year 2014 versus full year 2013). This same group reported gains of 100 percent for the previous year. Overall, private firms reported annual average growth of 55 percent for 2014, an increase over the previous year’s report of 42 percent growth.
- More hiring planned. The fastest growth companies plan to increase employee headcount by 43 percent (on average) by the end of 2015, an increase of 5 percentage points from last year’s 38 percent planned increase. All private companies plan to increase headcount by 31.5 percent (up from an 26.4 percent last year).
- Capital continues to flow to private software businesses. Private software and SaaS companies took in a median of $35 million in venture capital in 2014, while the largest private companies (between $40 and $90 million in revenue) took in a median of $80 million.
- West Coast leading East Coast. Private companies based on the West Coast of the U.S. report taking in about 2.5 times as much investment capital as those based on the East Coast.
The 2015 benchmarking used the input of over 100 small- and mid-sized B2B software and SaaS companies, and is based on 9 years of benchmarking data from over 300 companies.