One of my last posts before leaving the world of consulting and going to ServiceChannel full time (May 2012), was about favorable enterprise software valuations and similar in the stock market at that time http://softwareplatformconsulting.wordpress.com/2012/05/07/a-hot-quarter-for-enterprise-software-aka-b2b/. What a quaint notion that was!
Since that time, enterprise software valuations have become much more amazing. Last May, I noted that LinkedIn (LNKD) had doubled in price since its IPO, making the stock about $150 per share. It is now almost $250 per share and sports a market cap of $31 billion! Concur (CNQR) had moved from $38 to $63 in the year prior to that post. CNQR now stands at $111. Medidata (MDSO) was $27, it is now $100! SPS Commerce (SPSC) was $28 and it is now above $70. I could go on, but I won’t because it is depressing how few of these I owned during that time.
Of course, the other really interesting phenomenon during the past 18 months has been the number of Industry in the Cloud (IC) companies that have seen these luscious valuations and gone public during this time frame. Examples include:
- Cvent (CVT) in the meetings and events space. Cvent sports a nifty 18x EV/Revenue
- E2open (EOPN) in the electronics supply chain execution space. E2Open sports a 7x EV/Revenue multiple.
- Textura (TXTR) in the construction space. Textura sports an EV/Revenue multiple of almost 28.
- (I’m not even going to get into the non-IC enterprise SaaS IPOs–Workday, Tableau, Marekto, etc.)
It’s really fun to see many of these ICs have their day in the sun, as many of them have labored in obscurity for a decade. (And there are plenty more behind them.) Most of them have real, sustainable, growing revenue with widening moats, so they are creating real economic value. Still, it is hard not to have some feelings of “deja-vu” at these kinds of valuations.