Global Tech Biweekly Vol.8 | The main characteristics of cloud native SaaS companies – RPO, margins, and FCF

In this issue, we will discuss the main characteristics of cloud native SaaS companies. AMTD views: it is no surprise that along with expanding business scale, the revenue growth of major cloud native SaaS companies, Salesforce, Workday, and ServiceNow, is all slowing down; however, in terms of these characteristics, they are in different business cycle stages today. Salesforce has entered matured stage with expanding margins, growing unit economics, and is seeking growth through M&A; Workday is still in high growth stage with revenue growth above 30%, improving margins and realizing unit economics in S&M; ServiceNow is in high growth stage as well, realizing unit economics in cost of sales, but still relies heavily on S&M for expanding. In addition, given the nature of inherent annuity streams, we think FCF is a better way to value SaaS business.