Is SaaS Back? It’s Been a Very Good Week

So for many although not all, it’s been a bit of a rough ride in SaaS since December 2021. 

The IPO market shut down then, big M&A seems blocked by antitrust, so many unicorns have stumbled, and VCs seemed to have all rotated into AI.

In fact, we asked “Is SaaS Dead” in April 2024, which went a bit viral.

And now … I think this might have been the week that … SaaS Came Back.

First, we had Onstream: the third SaaS IPO since December 2021.

Not only was it a good one, it’s one that’s growing at top, top rates.  OneStream IPO’d at a $500m ARR, growing 30%+, and is worth a very healthy $5 Billion today.  And very little of that revenue is AI-driven.  In fact, OneStream noted its CFO customers are taking AI very slowly in the financials space.

Second, SaaS OG legal leader Clio raised $600m (much of it in secondary) at a $3 Billion valuation — and did it adding fintech to the stack, not just “AI”

Clio is one of the most respected players in SaaS legal tech, but it’s been at it for a while.  The most heartening thing is growth.  It took Clio well over a decade to get to $100m ARR in 2022 … and then double to $200m ARR in just 2 years.  Who said SaaS is slowing?  The catalyst though was adding payments to the stack.

Third, Vanta raised $150m at a $2.5 Billion Valuation — Not Just on AI Hype 🙂

The overall cybersecurity space remains on fire, and leaders here that started with SOC-2 like Vanta and Drata are growing at top, top-tier rates.  There’s no downturn here, either.  Vanta’s growth remains top tier well north of $100m ARR.

Fourth, Google Cloud and AWS are both re-accelerating even at their massive scale.  Google Cloud announced it had crossed a $40 Billion run-rate, growing a jaw-dropping 29% — and is profitable.

Yes, it’s fueled by AI spend.  But that’s much, much faster growth than the prior 3 quarters.

Finally, yeah — Wiz turned down a $23 Billion M&A Offer From Google

In our latest This Week in SaaS podcast with Harry Stebbings, see below, I argued why it was a good price, but not a crazy high one given that Wiz went from $0 to $500m ARR in just over 4 years!

It’s not necessarily much easier, if at all, for many of us that it was 12 months ago.  But overall, that was a pretty good week.  Multiples remain low, and M&A is still tough.

But the good news is “classic” SaaS is back.  April 2024 may have been the low point.  But July 2024 may have been when we look back and see SaaS just started then … to get its mojo back.