Saba Earnings show Growth and Momentum – Now Truly a SaaS Company

This week Saba Software released one of its strongest financial results in many years. Saba, which pioneered the market for enterprise learning management systems, has now turned the corner in its transformation into a SaaS software company. Some of the highlights which I believe are important:

  • Saba’s total revenues grew by 14% year over year (the largest growth in several years), and this represents a significant growth in SaaS revenues and a drop in license revenues.  The Saba “people systems cloud” is now becoming the company’s primary new offering.
  • Saba now has around 5 million users on its cloud offering (similar in size to CornerstoneOnDemand), again showing a shift toward SaaS.  The renewal rate is around 86%, which is down, but I believe some of these losses are clients using Centra, which is in a highly competitive collaboration systems market.
  • The company closed 41 new customer transactions, 9 of which were primarily SaaS solutions.  Saba’s customers tend to be large organizations – and this does not include a number of licensed customers who shifted toward Saba’s SaaS offering.
  • The company is soon to release a new Saba SaaS social learning platform, which is an easy-to-use, easy-to-buy social learning solution.
  • Saba now has around 60 direct sales staff and more than 70 alliance partners around the world. The company is already well established in Europe and is soon to launch a sales and service team in China. Interestingly, more than 50% of new business in the quarter came through these partners.  Wipro, a large global technology solutions provider, signed up as a Saba partner. So the company sees lots of opportunity out there.
  • Saba’s stock price is at a 3 year high, and the financial community is now starting to see Saba as a growing, emerging global SaaS company.

The Talent Management Market Shift

There are many rapid changes taking place in the market for talent and HR systems (which Saba calls People Systems).  Saba, which is an “elder statesman” in this market, is aware of these changes and is now rapidly transforming itself to take advantage of new opportunities.

  • CornerstoneOnDemand just completed an amazing IPO, and exposed that its revenues of $46.6 Million grew almost 60% from the prior year.  This performance demonstrates the rapid growth of the market and has challenged Saba (which has nearly 2X the revenues) to reposition itself as a SaaS company.  Cornerstone is a direct competitor to Saba – and while the company does not have the global footprint, it challenges Saba in most major opportunities.
  • SuccessFactors completed the acquisition of Jambok (a small social learning company).  This puts SuccessFactors clearly into the informal learning business.  But SuccessFactors still has no real LMS offering – so we still have to wonder when SFSF will either acquire a company like Plateau, Saba, or a smaller LMS company.  SuccessFactors is also heavily investing in its own collaboration solution, which competes with Saba Live and the upcoming SabaSocialLearning solution.
  • Taleo’s acquisition of Learn.com is now complete, and Taleo is actively promoting its enterprise LMS offering.  While Taleo’s offering does not scale to the capabilities of Saba, the company has thousands of existing clients who are now opting more and more for an “integrated” solution, somewhat closing opportunities for Saba in Taleo’s customer base.
  • Plateau Systems, another elder statesmen in the learning management systems market, continues to grow and evolve toward SaaS.  Today Plateau’s LMS revenues are around half of  Saba’s, and Plateau offers the entire range of talent management solutions as well.

Sometimes being a pioneer is a heavy burden to shoulder.  Saba truly started the enterprise learning management systems market, and has slowly watched a variety of companies build faster growing businesses in SaaS-enabled talent management.  Now Saba is fully in the SaaS marketplace – and has complimented its core LMS business with strong, highly competitive tools for enterprise collaboration and talent management.  We congratulate Saba with its ability to transform itself, and look forward to providing you more exciting trends in this market in the coming months.

Please join us at IMPACT 2011, our annual research conference, where we will be releasing our 2011 Talent Management Systems market share and market size information.  This is our annual “intimate gathering” of 400+ HR and L&D executives talking about best-practices and market trends – and it is not to be missed!

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  • Hector Gomez

    Thanks Josh. We are a Saba customer