Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
Yesterday after the bell, Zoom and CrowdStrike reported earnings. The two technology shops, members of the SaaS cohort of public companies that has performed so well this year, had high expectations to meet.
This column noted on Monday that both companies could help set market sentiment regarding SaaS valuations at firms thought to enjoy a strong updraft from COVID-19 and its related market disruptions. Working from home means that many companies needed new, better video conferencing abilities and more security tooling, the two things that Zoom and CrowdStrike provide.
If the pair failed to detail strong recent performance, their share prices, long rising, could have dramatically corrected.
But, in a huge boon to public SaaS companies — and, therefore, late-stage private SaaS valuations and early-stage SaaS investment — Zoom and CrowdStrike reported impressive financial gains. Notably in the case of Zoom, the improved results were sufficiently priced in that the company’s share price didn’t rise much after this disclosure, but defending huge gains was still a difficult feat.
CrowdStrike shares did rise after it reported its results.
On the heels of one of the sharpest rallies in SaaS history, let’s dig into how quickly the two firms grew and see what their new valuations and revenue multiples tell us about investor sentiment. If you are in a hurry, the short answer is that the risk-on move toward SaaS stocks doesn’t look like its about to abate. For those bullish on software companies, it’s a good week.
Let’s talk numbers first. Here’s how things shook out: