Things are looking up for small and midsize software and SaaS companies, both financially and in job growth, according to a newly released report.
The Software and SaaS Industry Report and Benchmarks 2015, compiled by benchmark services company Opexengine and the SIIA (Software and Information Industry Association) and released Sept. 10, was based on a survey of more than 100 business-to-business software and SaaS companies with revenues between $3 million to $300 million; 78 percent of the participants were private companies.
"This year, both private and public software and SaaS companies recorded strong revenue growth rate overall," the report states. "The leading companies in the 2015 benchmarking -- the top 25 percent by annual revenue growth -- reported topline gains of almost 150 percent [in 2014 compared to 2013]. This same quartile of top producers reported annual revenue gains of 100 percent last year." Private firms saw annual growth of 55 percent in 2014.
Hiring, meanwhile, dominates the landscape. "Given fast revenue and customer growth, SaaS companies are hiring rapidly to support and prepare for future growth with the effect of slightly reducing revenue per employee as they hire in advance of growth."
Overall, the companies with the fastest growth plan to increase employee head count by 43 percent on average by the end of 2015, up 5 percentage points from the previous year's 38 percent planned increase. Private companies plan to increase head count by 31.5 percent (up from a 26.4 percent last year).
"This year's report confirms that the recent financial gains are more than just a short-lived bump," Rhianna Collier, vice president of the SIAA software and services division, said in a statement. "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 midsized software companies showing such strength, it's not surprising that significant levels of venture capital are flowing into their operations."
Private software and SaaS companies reported taking in a median of $35 million in venture capital last year. The largest private companies -- with revenues between $40 million and $90 million -- took in a median of $80 million.