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SaaSy Stories – The exceptional growth of Livetiles ($LVT)

In our top down review of a selection of small SaaS companies we noted that the most attractive thing about Livetiles ($LVT) was its exceptional growth in ARR. Benchmarking this growth against similar sized start ups places them right at the top end of peers: What's more, this growth is a [...]

March 8th, 2018|

SaaSy Stories – Livehire ($LVH) – Good but not great?

In our top down review of a selection of small SaaS companies we noted that  Livehire ($LVH) had modest revenue growth for a loss making company at this stage in development. In this post we use our SaaS Framework to examine this issue in more detail. To be clear, LVH has very good growth.  The question is [...]

March 8th, 2018|

SaaSy Stories – Bottom up questions for Updater

In our top down review of a selection of small SaaS companies we noted that on face value metrics for Updater ($UPD) looked good.  Revenue growth, historic and forecast, was parabolic and this was being delivered with modest cash burn relative to peers.  However, the composition of this revenue growth is the key for further analysis. [...]

March 7th, 2018|

SaaSy Stories – “Some tech companies are trading on 20-30x revenue”

In a recent AFR article, Alex Waislitz was quoted in relation to his shareholding in Getswift, "you may have a framework of revenue over the next 12-18 months of $20-$30 million.  Some tech companies are trading on 20-30 times revenue. If that promised revenue does come through for GetSwift then you could see them being [...]

March 6th, 2018|

SaaSy Stories Pt III – Churn baby churn

In part II of our SaaSy Stories, we touched on the importance of SaaS Churn in understanding business performance and valuation.  In this post we discuss Churn in more detail. The Importance of Churn Getting customers is one thing, keeping them another.  Churn is the metric that defines this relationship and is a critical indicator [...]

February 21st, 2018|

SaaSy Stories Pt II – Bottom up Analysis of SaaS Value Creation

In Part I of our SaaSy stories series, we noted that the general question for understanding value creation for SaaS companies was no different to other growth companies: How much opportunity does the company have to deploy growth capital? What are the returns on this growth capital? For SaaS companies, their high gross margins and [...]

February 21st, 2018|

SaaSy Stories Pt I – The Fundamental Value Story of SaaS

A Top Down Apprach to Understanding SaaS Value Creation Software as a Service (SaaS) stocks are all the rage at present.  The 53 companies in the Bessamer Venture Partners (BVP) Cloud Index have a median market cap of US$2.4bn.  However, only 17 are profitable at the EBITDA line and these trade on a median EV/EBITDA [...]

February 21st, 2018|

Systems Thinking – Finding the Wood through the Trees

In their book The Systems View of Life, authors Capra and Luisi distinguish between analytical thinking - which involves taking something apart to understand it  - and systems thinking - which means putting it into the context of a larger whole.  They note that, “the tension between mechanism and holism has been a recurring theme throughout [...]

November 8th, 2017|

The Intrinsic Value Myth

Quoting Ben Graham is the investing equivalent of calling for the rare B side at a rock concert.  The objective is to seem knowledgeable, but all too often the result is to seem pretentious. The Ben Graham hit most commonly requested by investment fans is "intrinsic value".  The term itself supports an entire sub-industry of professionals [...]

October 8th, 2017|

The Gartner Hype Cycle as an Investment Tool

An essential element of the Investment Frame is deciding what sort of stories you want to focus on.  This post examines a tool that is useful for understanding the stories around early stage growth companies. The Gartner Hype Cycle is one of a number of marketing products published each year by the research firm of the same name.  It [...]

September 5th, 2017|