The application software industry includes companies that develop, distribute and host an integrated stack of software for businesses or retail consumers. It includes companies that provide enterprise software, finance solutions software, accounting, HR, and payroll software, among others. Application software companies provide customers with services such as software as a service (SaaS), platform as a service (PaaS), and infrastructure as a service (IaaS). Below is current consensus forecast data on unit economics, such as total subscription revenue, total professional services revenue and annual recurring revenue (ARR); financials, including free cash flow and operating income; and key ratios, such as SG&A/sales and operating margin. These key application software metrics aid market participants in identifying application software industry trends and future performance of application software providers, such as Oracle, Workday, Salesforce and Palantir Technologies.
What are the most important application software KPIs?
Key performance indicators (KPIs) are the most important business metrics for a particular industry and are where investors should look to find an investment edge. When understanding market expectations for the application software industry, whether at a company or industry level, here are some of the application software KPIs to consider:
- Total Subscription Revenue
- Total Professional Services Revenue
- Annual Recurring Revenue (ARR)
What questions do these key application software industry metrics answer?
With Visible Alpha’s application software industry forecast data, you can discover:
- Which application software company generates the highest subscription revenue?
- Which application software company is expected to generate the highest revenue from professional services in the next year?
- Which application software company has the highest total invoiced amount?
- Which application software company is expected to have the highest annualized value of all contracts at the end of the next fiscal year?
How can this data be used?
By opening up forecast data on key application software industry KPIs, Visible Alpha is enabling institutional investors, retail investors, business reporters, students and more to quantify and compare market expectations for companies across the industry.
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Total Subscription Revenue
Subscription revenue includes any performance obligation that has a defined term and is generated from the sale of software entitlement and support subscriptions, subscription software licenses, and cloud-based software as a service (SaaS) offerings. It primarily consists of fees earned from subscription-based arrangements for providing customers with the right to use the software.
Total Professional Services Revenue
Professional services revenue primarily includes fees generated from implementation, cloud configuration, on-site support, other consulting services, and training and education services.
Billings is the total billed or invoiced amount to a specific customer, based on the contract length/term and booked value. It is the cash to be collected by a company for providing a product/service to a customer over time.
Annual Recurring Revenue (ARR)
Annual recurring revenue (ARR) is a measure of predictable and recurring revenues such as subscriptions or maintenance, expressed on a last twelve-month basis. It is the annualized value of all the contracts at the end of a given period.
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