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SaaS performance in a recession

by

Sammy Abdullah

Operating margin was steady. Operating margin averaged -1% each quarter prior to the recession and -2% during the 6 quarters of the recession. The fact that operating losses didn’t blow out is pretty incredible, but unsurprising when you consider the fact that these companies grew through the recession and probably limited any increases in spend.

In summary, as a SaaS business, it’s not unreasonable to expect to grow through the recession, but recognize that the growth will be much more expensive to achieve. Make sure you have significant cash buffers and access to liquidity at all times; none of the publicly traded SaaS businesses went bankrupt but that’s only because they were able to access cash as operating profits swung heavily into the red.

sammy@blossomstreetventures.com

Sammy Abdullah

Managing Partner & Co-Founder

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