Why Wall Street Is Betting on Business Software

There were tech companies that took the worst hit in last year’s autumn’s stock market retreat. However, many of them bounced back quickly. These businesses that were able to nicely recover were the ones called or known as software-as-service or SaaS businesses.

Popular SaaS businesses out there include HubSpot, Salesforce, ServiceNow, and the Agilisys Lodging Management. Do these companies give their services to may industries like the iGaming sector? You may wonder what is iGaming industry getting from SaaS companies.

Well, basically, SaaS companies offer different types of software services to the iGaming sector. Casinos need cloud-based technology that could help them manage their website, site traffic, and also customer service.

SaaS companies would also offer online traffic management solutions wherein the online guests would be sent a notification or email as a welcome to their website. Most or many of the best online gambling services would partner with SaaS companies to ensure that they deliver state-of-the-art services to their customers.

If you’re wondering how it specifically works for iGaming casino online companies, well, they use SaaS to be able to deliver live dealer interactions. SaaS also enables these companies to smoothly process online payment transactions. The services they get from SaaS businesses are the reasons why your payments are posted as soon as you make them.

Definitely, SaaS is very beneficial to the online casino industry as it improves the businesses in this sector. Many online casinos that aren’t partnered with SaaS companies don’t do well in the business because many people easily get turned off with slow transactions and respond to customer service.

With that example alone, we can already see why investors are betting on SaaS companies because of their importance to businesses. Wall Street sees that many fast-growing but also lossmaking apps can become essential tools in many industries.

The former head of eBay, Mr. Donahoe, spoke about the significance of these companies. He said, “These are core, fundamental platforms. They’re having the same fundamental impact at work that the FAANGs (Facebook, Amazon, Apple, Netflix, and Google) had at home.”

The thing about companies is that they are known to trade at six or seven times the revenue. The business models of these companies are quite predictable and many of them would spend almost 50 percent of their revenues on sales and marketing. They do lose money as they grow but they have strong cash flow and most customers that they have will still keep paying for their subscriptions despite economical problems. And so, it’s easy to see why investors have these companies as their favorites.

The managing partner of Madrona Ventures spoke about this too and said, “These companies know how to put a dollar in today and get three dollars out in future.”

One of the leading companies right now that offers SaaS is Salesforce. This company is known to be used by businesses in the sales and marketing industry. Another one is Workday, which is known to be used by many human resources departments.

Both companies have joined two of the biggest traditional software companies, Adobe and Microsoft. They became a staple cloud service for many businesses.

Currently, there are now over 30 SaaS companies with a stock market value of over 3 billion US dollars and they are still expected to grow. Many predict that the growing experimentation of SaaS businesses has brought the industry into the brink of consolidation. This means that SaaS will then follow the growth of earlier software business markets.

Matt Ocko, a partner at Data Collective which is a venture firm in San Francisco talked about SaaS companies this way with FT: Once a SaaS company becomes a system of record for some significant business, they have a shot at rolling up others.”

It appears that many SaaS companies always take the viral approach as their initial marketing strategy. They count on their workers to discover and try out new services on their own before they follow up and sell a contract to their employees.

“It appears terrifyingly undifferentiated to us. It boils down to the right time, right place — and brutal sales execution. For every Slack or ServiceNow, there are a thousand unmarked graves,” said Mr. Ocko.

Many firms are already leveraging a growing movement towards cloud services. In fact, cloud spending by the public is forecasted to reach 210 billion dollars this year and this is according to the IDC. Companies that have high confidence in this include Slack, which is a workplace messaging app.

While SaaS business is expected to keep growing in the next few years, FT has said that newcomers may have a hard time dislodging the first SaaS companies in the market.