IterAxon Blog
Economic and Financial Analysis of Technology
Our blog is designed for anyone - investors, entrepreneurs, chief financial officers, accountants, consultants, students...- who wants a better understanding of the economic and financial drivers of performance in the field of technologies.
The views expressed are those of IterAxon. These views are based of years of financial due diligence and financial advisory expertise (which include, but are not limited to, discussions with clients/experts, together with our interpretations of other sources).
Digital and emerging technologies are fast-moving and complex fields of research and analysis. As it is our objective to enhance collective knowledge, please do not hesitate to share with us your own insight, should you feel as though you have something valuable to share on one of the subjects touched upon within the blog.
The European Union as a catalyst for European technology development.
Taking better control of tech development in Europe is not only an opportunity for the European Union (E.U.) to foster economic growth, but it is also a matter of sovereignty for all its member states.
Although the E.U. can sometimes be portrayed as an impediment to economic and tech development, especially as the effects of larger internal markets in the U.S. and China are not as impactful within the scope of the single European market, we show that (and how) the E.U. can become a powerful catalyst for European tech by (i) combating “fragmentation”, (ii) building trust and restoring competition and (iii) expanding financing.
IterAxon - 21 February 2022
Pricing in SaaS: How it is evolving to remain an essential contributor to success.
Software as a Service has progressively become a dominant model of software utilization over the 2010s and is likely to keep up growing in the 2020s, driven by the ongoing extension of digitalization, cloud computing and artificial intelligence.
Though the emphasis is often made on products and solutions, SaaS pricing shall not be overlooked, being a lever at the core of the success of a company and contributing to define and enhance its business model. If SaaS pricing is often assimilated to recurring fixed subscription-based license fees, we show why the reality is more complex and moving. We then explore the reasons behind some trade-off with more usage-based models and their implications.
IterAxon - 8 February 2022
Technology and inflation: How they influence each other, in the short and longer term.
Soaring prices since Q2’21 have resulted in increasingly more intense debates on the transitory vs. lingering nature of particularly high levels of inflation, together with the existence of a Tech bubble and the associated risks of correction or burst.
While the current sources of inflation over FY21 and early FY22 may have an impact on the growth, profitability and valuation of Tech companies, we show that on the longer run, innovations shall continue to exert positive disinflation forces, as a result of (i) lower semiconductors costs, (ii) limited constraints of scaling for SaaS companies, (iii) digital marketplaces' contribution to more efficient market on products and services (including workforce), (iv) productivity gains in manufacturing and supply chains, and (v) an extended access to information and knowledge.
IterAxon - 3 February 2022
The contribution of artificial intelligence to software companies’ profitability
The emergence of cloud computing and big data, favored by improved capacity in terms of computing and storage resources, has contributed to removing traditional constraints on scale and profitability. Though enhancing further these potential impacts, the expansion of AI in software companies’ offers has a more equivocal impact on scale and profitability, which shall not be overlooked.
IterAxon - 5 November 2021
Identifying revenue erosion and understanding its main sources
Churn can be defined and used in many different ways. We explore in our article what we think represent the most relevant definitions, and propose other complementary approaches to scrutinize more in-depth its origins.
IterAxon - 2 November 2021
How to define marketplaces’ profitability and identify its main drivers?
On-line marketplaces basically consist in platforms aiming at frictionlessly connecting buyers and sellers (or at least multiple counterparts). As their growth has been tremendous over the past decade, their profitability is less easy to appreciate, and notably requires figuring out margins through several levels.
IterAxon - 22 October 2021
Blurred Monthly Recurring Revenue (MRR) – A waterfall view
Monthly Recurring Revenue (and its yearly equivalent ARR) is a well-known financial aggregate in the world of cloud-based SaaS companies, a sort of holy grail in most of subscription-based software valuation models. Though a lot has been said on its definition(s), we share in the present article our view on some underlying - sometimes significant - subtleties that we noticed through our manifold audit and advisory engagements over the past few years. Our aim is to provide a helpful methodology and draw your attention on main pitfalls, with a view of better appreciating the framework of MRR.
IterAxon - 19 October 2021