SM: What is your take on the Street’s understanding of how to analyze SaaS companies. Why are SaaS companies down so much? MG: It is coming around. I think SaaS gets put in the same bucket as tech. Right now there is a lack of visibility and understanding of how the future is going to look. I think everybody wanted to get out of tech and into cash. I don’t think SaaS is getting overly punished, but it will all work out in a relatively short time. The companies that are growing and making money will be fine.
The companies that can’t sustain their growth, that have customer service issues, or can’t get new products to market will suffer the same fate as every company that says they will do something and does not do it.
If you read the headlines you will see things like, ‘Taleo has a growth strategy in place but is mindful of the economy’, ‘Taleo takes a conservative view of 2008’, ‘Taleo takes a rational view of 2008’.
We are here for the long haul. This is only the third company I have worked at. We don’t think of things quarter by quarter, we think in terms of long term investment strategies and we take care of our customers. We drive execution across the board. You cannot think about that in a day to day mode of what your stock is going to do.
SM: What are you seeing in terms of the recession fears? Are you seeing slowdowns in the purchase cycles? MG: It is too early to tell. We have not seen anything so far, but that does not mean it isn’t happening.
SM: Of the SaaS companies I have talked to, several are executing and growing well and not missing earnings. Are you of the opinion that it is a recession proof category? MG: There is no such thing as recession proof, but I think you can have recession resilient. I think well run SaaS companies are recession resilient. You have a better idea of what your revenues are going to be, and if you are smart about your expenses, you are only going to spend what you can see. You have an opportunity to let your investors know where you are going to be on top line and manage the bottom line.
SM: How much backlog can you safely predict? MG: We have said that we will have $200 M in backlog and that only includes our application revenue. It has no services number in it, and none of our new performance management revenue in it.
SM: Great, looks like your 2008 looks pretty well fortified. Congratulations!