SaaS growth slowed, but didn’t stop
Software as a service companies saw a decrease in average annual growth rates during 2008 and into 2009 (Figure 1). Growth plunged from more than 40% before the Great Recession to approximately 10% during that period. SaaS Capital, an industry growth fund, reports there were only 16 publicly traded SaaS companies prior to the Great Recession; over 80% of these companies continued to grow despite the economic contraction.Growth of traditional software licenses slowed more than SaaS
During the recession, there were more software companies providing on-premise products than SaaS offerings. One of the benefits of a SaaS offering is that revenue is generally spread evenly over a period, rather than recognized at a point in time. Because recognition of revenue at a point in time can translate to uneven earnings, revenue growth rates for SaaS (Figure 1) outperformed those of software companies selling licenses. When the economy slowed, there was an abrupt decline in software license revenue (Figure 2).
