How SaaS performs during recession

Sammy Abdullah
2 min readMar 18, 2020


We took a look at the data from 15 publicly traded software companies during the recession. The data is below.

1. Growth fell 15% on median. During the first 4 quarters of the recession highlighted in yellow, YOY growth fell 15% on average across those quarters. Only 4 companies showed more significant YOY drops during the recession. Calidus Cloud performed the worst, but their story was about transitioning from a services & license business model to subscription. Additionally, they were doing shorter and less expensive on-demand implementations, which they knew would shrink service revenue. Adobe was also undergoing shifts in business model for some of their segments, specifically “platform revenue.” Setting aside these underperformers, it’s remarkable to see companies like LivePerson, LogMeIn, Salesforce, and Ultimate Software grow straight through the recession.

2. Operating margin got crushed. While revenue fell 15% on average during the first 4 quarters of recession, operating loss fell 65% on average during the first 4 quarters of the recession. Operating margins fell to 1% during the first two quarters of the recession. While operating expenses were cut on median, SaaS companies have high fixed costs as talented people are very painful to lay off. Note that after the recession, operating margin came roaring back.

If the oncoming recession is anything like 2008, growth will certainly decline, but it won’t reach panic levels. Once good software is a part of a company’s tech stack, it can be painful to rip out. Burn will blow out however, as laying off good employees is extremely painful for SaaS companies. Engineers, developers, customer success personnel, support personnel, and good sales personnel are all must have’s. Good luck out there.

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