Ahead of earnings, SaaS stocks show resilience

Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

This morning we’re taking a brief look at SaaS stocks ahead of earnings, making note of their recent movements (and recovery), and what those somewhat violent movements could mean for SaaS startups as we head into the new economic world.

Investors generally expect churn (revenue loss) to rise at SaaS firms. For modern software startups that need to raise new capital, more churn means slower growth. If public software companies trip over their earnings reports, clipping their valuations, it could set up a double-bind for a number of startups. Let’s explore.

A recovery, a return

Tracking the value of public SaaS companies is a fun way to understand a piece of the venture capital market. If public SaaS shares rise, their gains help founders raise new money at attractive prices, defending and extending private valuations. When SaaS stocks fall, they do the opposite.