The SaaS 20 Stock Index climbed 1.86 percent for the week ending April 17, pushing software as a service stocks to their highest levels since mid October. Here’s a look at the weekly SaaS winners and losers.
This week’s SaaS 20 Stock Index winners included:
Constant Contact (CTCT, +16.65%): Shares in the email marketing company have been rising steadily since mid-March, and apparently investors are feeling upbeat about Constant Contact’s forthcoming Q1 results, which will be announced May 1.
RightNow Technologies (RNOW, +8.71%): Though not the size of Salesforce.com, RightNow seems to be emerging as a break-out SaaS software provider. Nearly 2,000 businesses and government agencies leverage the company’s CRM-related software. And shares have been rallying ahead of RightNow’s Q1 results, which will be announced April 29.
Google (GOOG, +5.30%): This Barron’s article recaps Google’s most recent quarterly results, announced April 16. Yes, the company remains very dependent on Google Adwords revenue. But we also believe the Google Apps Reseller program is gaining momentum with solutions providers.
This week’s biggest SaaS 20 Stock Index decliners included:
SuccessFactors (SFSF, -6.51%): Although shares dropped on the week, the on-demand HR/talent management software provider has recruited a Yahoo search veteran to head up product management.
Intuit (INTU, -3.98%): No cause for panic here, but Intuit shares dropped a bit because analysts see a “challenging QuickBooks environment.” Translation: The recession is hurting or limiting demand for QuickBooks. Intuit is part of our index because of the company’s growing online software business.
The Bigger Picture
As a whole, SaaS stocks seem to be recovering faster than the overall stock market. Our SaaS 20 Stock Index fell roughly 50 percent in 2008, and another 10 percent in the first few weeks of 2009. But as broader markets bottomed out, investors seemed to move even more aggressively into oversold SaaS stocks.
I’m not suggesting that the rally will continue. But the recent SaaS stock momentum in undeniable.
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Posted In: SaaS 20 Stock Index
Tags: ConstantContact | CTCT | GOOG | Google | INTU | Intuit | RightNow Technologies | RNOW | SFSF | SuccessFactors
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Joe a few questions.
1. What is the criteria to become part of the stock index?
2. Do you rotate companies in and out of the index?
3. If so how often?
Rick: The main SaaS 20 Stock Index page explains quite a bit about our original efforts for the index. The original criteria was to find companies that generated the bulk of the revenues from SaaS (examples: NetSuite, Salesforce.com) while mixing in a few companies that are shifting from shrink wrap/on premise to SaaS (examples: Intuit and Ingram Micro through their Seismic division).
The index isn’t perfect but it does a reasonably good job of tracking SaaS trends and providing a market reality check.
We’ve considered rotating companies in and out of the index. At least 4 companies have requested being added. We may rotate them in (and four out, naturally) at the end of Q2/start of Q3. That is, close of business June 30, 2009. Still not sure.
Are you associated with a SaaS company? Wondering what prompted you to post your question? Thanks for reading MSPmentor.
Joe thank you for the answers. I’m with a hosting company that may have a strong SaaS story to share soon. Sorry I can’t share any more information at the moment.
Rick D.M.: When you’re ready to share more info I’ll be ready to listen.
How may companies were evaluated prior to selecting the top 20? You had mentioned there were 4 others requesting to be added. I’m wondering if the pool of companies up for nomination in the top 20 are in the double or triple digits. I see SaaS growing and there are more being built from the ground up every day.
Another question I have is whether or not including on-premise to SaaS companies skews the results. Most on-premise solutions are deriving revenue from existing maintenance licensing.
Vincent
Service Management Link
MHelpdesk, Service Management Software
Vincent: Please don’t consider the SaaS 20 Stock Index the “top 20″ SaaS providers. We aren’t out to name the “best” or “top” SaaS companies. Instead, we us the index to track the overall Software as a Service market.
The vast majority of pure-play SaaS companies remain privately held. In fact, we struggled to find 20 companies to qualify for the original index more than a year ago.
In terms of “on premise” SaaS skewing the results, all the SaaS 20 Stock Index members are equally weighted. If Salesforce.com goes up 5 percent and another index member falls 5 percent, the net result on the index is zero change.