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 whether this growth is at a level that would put it in the exceptional category of SaaS start ups that its valuation seems to imply.
To refresh from our benchmarking studies, top quartile start ups with this level of revenue should be growing at 200-400%. Livehire is growing at slightly over 100%.
Despite perceptions of a network effect, growth in TCC’s seems heavily dependent on increased spending rather than any organic feedback loop.
To date volume has been all volume driven. The pricing model has remained unchanged.
Are these factors behind Livehire’s recent revenue pivot?
Whilst the company is aiming to hold effective pricing stable over the long term, there is a clear risk that this pivot will impact short term outcomes.
Livehire looks to have an interesting product, demonstrating good growth and a potentially very large market opportunity. However, current growth is not exceptional relative to valuations. Furthermore the recent change in pricing seems to confirm challenges in this regard. This pricing pivot may well prove to be effective, however, as we have noted previously, any pivot represents increased risks for investors.
Disclosure: I direct readers to the general disclosure regarding this website. The above is not financial advice and I may trade in any of the above securities at any time going forward.