“So we're seeing some slowdown in certain sectors and, frankly, acceleration in others, things like low-code, no-code environments, productivity, cybersecurity to protect the enterprise …
So am I seeing a broad slowdown across our platform? No. Are we seeing some pockets? Yes.”
— Jason ✨Be Kind✨ Lemkin (@jasonlk) November 8, 2022
So those of us who know Vista Equity Partners (and many of you may not) think of it as one of the largest Private Equity firms buying SaaS companies. Perhaps the largest. Among others, it’s recently bought Gainsight, Salesloft, Drift, BetterCloud, Pipedrive, Avalara (just in August), KnowBe4, and other leaders, along with established folks like Citrix and more.
But I hadn’t really thought of them as a proxy for all SaaS companies until I saw the CEO’s interview from a few weeks back. The companies they own a majority of are collectively at $24B (!) in ARR, so it’s second only to Salesforce in SaaS. And they span dozens of leading vendors in SaaS.
So Vista knows exactly what’s going on in SaaS buying now, especially enterprise and mid-market. It does less in SMB.
And here’s what it’s seeing:
- On average, its 50+ SaaS companies at $200m+ ARR are seeing growth ranging from 20%-25% a year, versus 25% last year. That’s some slowdown for sure, but not a downturn.
- Some sectors aren’t seeing any slowdown, like cybersecurity, productivity, and “no code”. This is also what I’m seeing. Monday, for example, just came out of a blow-out quarter.
- Vista’s investments are older, established SaaS companies with brands. So it’s less representative of raw startups, but more representative of overall enterprise and mid-market spend.
The environment isn’t getting easier in SaaS, that’s for sure. It’s harder than it was, and some categories are seeing more headwinds than others. And I think the first bullet point is telling. For many of us, we’re still growing at a nice rate. But it’s maybe 20% harder than last year.
Vista has a pretty broad look at SaaS. Revenues are down in some categories, and not others. Growth is probably 20% more challenging than in the best of times. But multiples aside, it’s still Pretty Good Times.
Just not the Crazy Days of 2021.