The European Union as a catalyst for European technology development

The contribution of the U.S. and China to emerging technologies in Europe is essential, whether through the infrastructure, products and solutions they deliver, or the financing they provide. While there is no question of European Union’s countries doing without them in the near future, this growing external influence – which is showing no signs ofContinue reading “The European Union as a catalyst for European technology development”

Pricing in SaaS (“software as a service”): How it is evolving to remain an essential contributor to success.

SaaS has progressively become a dominant model for software utilization – increasingly replacing perpetual license / maintenance models – and is likely to continue growing through the 2020s, driven by the ongoing expansion of digitalisation, cloud computing and artificial intelligence. Though the emphasis is often – deservedly – placed on products and solutions, SaaS pricingContinue reading “Pricing in SaaS (“software as a service”): How it is evolving to remain an essential contributor to success.”

Technology and inflation: How they influence each other, in the short and longer term.  

Soaring prices since Q2’21 have let to increasingly intense debates on the transitory vs. persistent nature of particularly high levels of inflation, along with the existence of a Tech bubble and the associated risks of correction or bursting. Inflation (CPI – Consumer Price Index) reached more than 7% and 5% in Dec.21 on an annualContinue reading “Technology and inflation: How they influence each other, in the short and longer term.  “

The contribution of artificial intelligence to software companies’ profitability

The emergence of cloud computing and big data, fostered by improved computing and storage resources capacity, has helped to remove traditional constraints on scale and profitability. While these potential impacts are further enhanced, the growth of software companies’ use of AI in their offerings has a more equivocal impact on scale and profitability, that shouldContinue reading “The contribution of artificial intelligence to software companies’ profitability”

Identifying revenue erosion and understanding its main sources

  Churn is basically the impact of losing clients (or contracts), expressed either in terms of the number of clients lost – “client churn” – or lost revenues as a result of lost clients – “revenue churn”. Downsell is defined as the diminution of revenue on existing clients (or contracts). The concept of “churn” mayContinue reading “Identifying revenue erosion and understanding its main sources”

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. As the below list does not pretend to be fully exhaustive, 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.

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.