3 ms·
Worth looking at the 40% rule for SaaS: https://www.feld.com/archives/2015/02/rule-40-healthy-saas-company.html https://www.feld.com/archives/2015/02/rule-40-h
by beambot 8y ago
Worth looking at the 40% rule for SaaS: https://www.feld.com/archives/2015/02/rule-40-healthy-saas-company.html https://www.feld.com/archives/2015/02/rule-40-healthy-saas-c...
The rule states that a "sane" target for annual growth rate + profit margin is 40%. At a 100% YoY growth rate and -33% profit margins, Elastic is sitting at 70% -- making it pretty solid!
- silversmith 8y agoYou could say that. You could also say that they are losing money today, and expecting to lose twice as much money next year.
- greglindahl 8y agoRight. It's the first group who's buying the stock in the IPO, not the second.
- sonnyblarney 8y agoWhat is the 40% based on? Because there isn't a hint of justification in that post. If customer acquisition costs are really high, then they're throwing good money after bad. All of this talk of 'solid financials' while a company is losing money every quarter and whereupon there's no evidence of profit at the unit level ... is scary, it feels like one of those reddit ico pump-it-up chats. It's all very highly speculative, is what it is. So let's hope it's a great company, with a solid offer and they manage the growth effectively.