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SaaS Growth

Software as a Service (SaaS) Market Estimated To Reach $208 Billion By 2023

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The overall SaaS market is expected to continue growing, as organizations around the world adopt SaaS solutions for a variety of business functions. Among these are solutions for customer resource management (CRM), enterprise resource planning (ERP), as well as web-hosting, and eCommerce.

SaaS companies offer their products to customers through the internet for a monthly subscription or a pay-as-you-go model. This may be cheaper for customers, as they do not have to invest in other on-premises software products up-front and are instead more flexible to end contracts of software products they do not need anymore. This way, SaaS companies also benefit from the recurring revenue. Importantly, they are also responsible for continuously developing the software and running it on their infrastructure. SaaS applications are run in the cloud and are usually accessible through desktops and mobile applications, as well as through a web interface. Together with the platform as a service (PaaS) and infrastructure as a service (IaaS), software as a service (SaaS) is one of the three primary tiers of cloud computing, allowing businesses to redirect resources away from IT hardware, software, and personnel expenses, and towards other business needs. In the SaaS market, the largest companies are currently Microsoft, Salesforce, Oracle, SAP, and Google. Active Companies in the markets today include HS GovTech Solutions Inc. (OTCQB: HDSLF) (CSE: HS), Microsoft Corporation (NASDAQ: MSFT), Zoom Video Communications, Inc. (NASDAQ: ZM), Shopify Inc. (NYSE: SHOP) (TSX: SHOP), Motorola Solutions, Inc. (NYSE: MSI).

According to a report from Statista, this is how SaaS works. “Under the SaaS model, service providers sell customers access to and use of application software and databases through the cloud delivery model. The infrastructure, platforms, or operating systems, and often the granular details of the software are concealed from the customer, who would typically connect to the service via a client program or web browser. The customer is not responsible for maintaining the hardware or resources, as the software provider will either contract an independent software vendor to host the application and related data or otherwise host the application on its servers. Because of this, end-users are paying a per-user or per-use fee to the service provider to maintain access to the most up-to-date version of the software. This pricing model means that costs are flexible and scalable, allowing users to be added or removed as necessary, and shielding the customer from the capital expenditure normally required to establish new platforms, infrastructure, and licenses for software. In 2021, the software as a service (SaaS) market is estimated to be worth approximately 152 billion U.S. dollars and estimated to reach 208 billion U.S. dollars by 2023.”

HS GovTech Solutions Inc. (OTCQB: HDSLF) (CSE: HS) BREAKING NEWSHS GovTech Solutions Inc. Reports Continued Revenue Growth for Q1 of 2022 – HS GovTech Solutions Inc. (the “Company” or “HS GovTech”), a leading provider of SaaS applications for government, announced its financial results for the three months ended March 31, 2022. All financial figures contained herein are expressed in U.S. dollars (“USD”) unless otherwise noted.

Fiscal Q1 2022 Financial Highlights:

  • Total revenues increased during Q1-22 to $1.50 million, compared with $1.16 million during Q1-21
  • Subscription revenues increased to $1.03 million, compared with $0.94 million in Q1-21.
  • Professional Services revenues increased to $0.47 million, compared to $0.22 million in Q1-21.
  • Annual Recurring Revenue (“ARR”) under contract increased to $4.45 million on March 31, 2022, compared to $4.16 million on December 31, 2021, and $4.26 million on March 31, 2021. During Q1-22 and Q4-21, the Company was able to more than replace the decrease in recurring revenue due to the cancellation notice received from one major customer in October of 2021.

Chief Executive Officer, Silas Garrison, discussed the financial results. – “Our Q1-22 financial statements continue to indicate significant growth, largely due to the continuous investment we have made in improving the breadth and depth of our product offerings. Additional offerings coupled with increased delivery capacity continue to set the stage for even more aggressive growth in the future. FY21 revenue was the highest on record for the company and Q1-22 carries that momentum forward. The quarter was strong for our sales team, with contract awards totaling $3.26 million in total lifetime revenue. We expect the sales team’s strong performance to continue through FY22, with a return to a full slate of in-person industry conferences. Industry conferences and in-person meetings allow for enhanced exposure of our products to potential customers across a myriad of use-cases.

The increased capacity that we put in place during FY21 (growing from 46 to 88 employees) continues to allow for a greater pace of implementations, with professional services revenue up 109% from Q1-21, while implementation expenses were up only 32% for the same periods. It also continues to allow an increased pace of development of our products, with a total R&D spend in Q1-22 of $0.62 million, compared to $0.14 million in Q1-21. We expect enhancements coming from our R&D efforts to improve the implementation experience for customers as well as offer a growing range of capabilities, including in use cases beyond standard environmental health such as Fire Departments and Code Enforcement.

I am proud of the team at HS GovTech and am pleased that we are well-positioned for significant revenue growth through 2022 and beyond.”

Other recent developments in the markets include:

Microsoft Corp. (NASDAQ: MSFT) recently announced the general availability (GA) of the stand-alone version of Microsoft Defender for Business. Defender for Business brings enterprise-grade endpoint security to SMBs, including endpoint detection and response capabilities to protect against ransomware and other sophisticated cyber threats.

In April 2022, Microsoft surveyed more than 150 small and medium businesses in an online quantitative survey in the U.S. to better understand changing SMB security needs. The survey found that more than 70% of SMBs think cyber threats are becoming more of a business risk. That concern is well-founded — nearly one in four SMBs surveyed reported experiencing a security breach in the past year.

Despite facing similar risks as enterprises, SMBs often lack access to the right resources and tools, including specialized security staff. Many SMBs still rely on traditional antivirus solutions for their security. Although 80% of SMBs state they have some form of antivirus solution, 93% continue to have concerns about increasing and evolving cyberattacks.

Zoom Video Communications, Inc. (NASDAQ: ZM) recently announced financial results for the first fiscal quarter ended April 30, 2022.

“In Q1, we launched Zoom Contact Center, Zoom Whiteboard, and Zoom IQ for Sales, demonstrating our continued focus on enhancing the customer experience and promoting hybrid work. We believe these innovative solutions will further expand our market opportunity for future growth and expansion with customers,” said Zoom founder and CEO, Eric S. Yuan. “Additionally in Q1, we delivered revenue of over one billion dollars driven by ongoing success in Enterprise, Zoom Rooms, and Zoom Phone, which reached 3 million seats during the quarter. We also maintained strong profitability and cash flow, including 17% in GAAP operating margin, approximately 37% non-GAAP operating margin, approximately 49% operating cash flow margin, and over 46% adjusted free cash flow margin.”

Shopify Inc. (NYSE: SHOP) (TSX: SHOP), a provider of essential internet infrastructure for commerce, recently announced financial results for the quarter ended March 31, 2022.

“While we’ve experienced massive macro shifts since the start of the pandemic, the one mainstay has been that Shopify is the commerce platform of choice for merchants in any environment, with the ability to support commerce on any surface,” said Harley Finkelstein, Shopify’s President. “This has earned Shopify significant merchant trust and the ability to help them with more parts of their business, which is why we are eager to bring Deliverr’s team and technology to our merchants.”

“The agility of the Shopify platform was evident in our first quarter,” said Amy Shapero, Shopify’s CFO. “Our omnichannel capabilities helped merchants navigate the welcome return of foot traffic to their brick-and-mortar stores, and enabled them to leverage the growing volume of commerce on social, in search, and apps. Being able to offer a delivery promise and fast fulfillment across all these channels boosts conversion. We are confident Deliverr’s ability to simplify the process, and arms merchants with visibility and control from the display of a delivery promise across multiple channels through its completion, will be a huge benefit to our merchants.”

Motorola Solutions, Inc. (NYSE: MSI) recently announced that it has commenced a cash tender offer (the “Tender Offer”) for up to $275,000,000 aggregate principal amount, as may be increased or decreased by the Company (the “Maximum Amount”), of its 4.000% Senior Notes due 2024 (“Notes”).

The Company expects to fund the repurchase of notes accepted for payment in the Tender Offer with the proceeds from the issuance and sale of debt securities in one or more capital markets transactions. The Maximum Amount represents the aggregate principal amount of Notes subject to the Tender Offer. The Company expressly reserves the right, in its sole discretion, subject to applicable law, to increase or decrease the Maximum Amount, without extending withdrawal rights and/or terminating the Tender Offer at any time before the Expiration Date (as defined below). If Holders (as defined below) tender more Notes in the Tender Offer than they expect to be accepted for purchase by the Company based on the Maximum Amount and the Company subsequently accepts more than such Holders expected of such Notes tendered as a result of an increase of the Maximum Amount, such Holders will not be able to withdraw any of their previously tendered Notes. Accordingly, Holders should not tender any Notes that they do not wish to be accepted for purchase.

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Prateek writes about everything in SaaS. When not chasing trends and scoops he likes to travel, and binge on Netflix. Got a scoop? Send it to [email protected]
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