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WIKI ANALYSISSaba software (NASDAQ:SABA) sells e-learning software. Saba's software is a communications platform that allows instructors to teach a class of "virtual" students who attend the class via a web browser. Saba's software displays the slideshow the instructor provides, transmits the instructor's voice over the internet, and has built in feedback and communication functionality (so that students can signal they have a questions during a lesson).
Saba's software isn't really used by universities, however - it's used by corporations who have to train employees. This training can be anything from basic day 1 onboarding for new employees (IE, how to do your job) to required compliance training (for employees in regulated industries where ongoing training is required) to ongoing training for sales reps.
Although most of the company's revenue comes from e-learning products, it also sells other HR-related software, such as software to track employee performance, and for talent management, which the company cross-sells to existing e-learning customers. [1]
Revenue breakdown
Saba breaks its revenue down into 4 categories:
- Licensing Revenue (20% of 2008 revenues) - 91% gross margin. [2] These revenues are for perpetual licenses for a one-time fee - IE, a client buys SABA's software.
- Updates and support Revenue (33% of 2008 revenues) - 75% gross margin[3]
- On Demand Revenue (17% of 2008 revenues) - 60% gross margin[4] - this is Saba's Software as a Service (SaaS) product, and it competes with their licensing revenue. The company has been trying to move customers to this lower-margin product, which has the benefit to the company of recurring / subscription revenue.
- Professional Services Revenue' (30% of 2008 revenues) - 32% gross margin[5]
The company's customers have been shifting from it's relatively high-margin full-license software, to the (for Saba) lower margin "on demand" software as a service product. [6]
Resellers / integrators such as IBM accounted for 30% (and growing) of SABA's revenues in Q3 2009 [7]
References
- ↑ Q3 `09 earnings conference call transcript.
- ↑ SABA 10K, page 35, "Result of Operations"
- ↑ SABA 10K, page 35, "Result of Operations"
- ↑ SABA 10K, page 35, "Result of Operations"
- ↑ SABA 10K, page 35, "Result of Operations"
- ↑ SABA 10K, page 35, "Result of Operations"
- ↑ Q3 `09 earnings conference call transcript.
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