Everyone of course knows what the acronym "SaaS" stands for -- it is "software as a service" -- but it is surprisingly harder to define than one might think. Consider three examples:
1. A traditional business software platform like Microsoft Word, Excel, or Photoshop. Here, it seems clear that the product fits the mold of "software as a service" because it involves a subscription to be a piece of software and the software provides access to a software-like function, that is, the software is the service.
2. A telehealth company that provides an app for access to a range of services accessible through the application. Is this software as a service? (My own view is that I think it could be, but often it in fact is not).
3. A software company that provides e.g., communications services like Zoom or Skype. These are close calls like the telehealth companies, because they enable a functionality but it is a functionality that was achieved without the need for software in the past. (Theoretically word processing was too, however).
These seeming definitional questions are more than theoretical, because it seems like what makes an SaaS company truly special is its capacity to develop an almost impregnable "moat" to use Warren Buffett's term. There needs to be a special sauce to the software offering that makes it uniquely difficult to either develop the software package (to prevent competitors from entering) or for users to switch to a different software system.
Viewed in this light, cybersecurity offerings like CrowdStrike and Zoom may be less attractive or may not even necessarily fall within the core definition of SaaS companies.
What makes a stock SaaS?
Forum rules
This board has rules. It’s not like other boards. If you don’t follow the rules your posts are likely to be deleted, and if necessary you may even get barred from the board. That’s just the way it is. Life is hard sometimes. This board is for the discussion and analyzing of individual SaaS growth stocks in a cooperative and courteous manner and, secondarily, the philosophy around investing in them. That means that there are subjects that are Off-Topic for this board. There’s nothing wrong with them as topics. There are other boards where they are welcome, or even the chief topic of conversation. These include politics which, however, quickly spins out of control and ends up with people who had been amiably working together discussing a stock, suddenly viciously arguing. Political posts will be immediately deleted. Investing subjects that are off topic include technical analysis and option trading subjects, including describing the details of your option positions, or value investing, or turn-around investing, or dividend or income investing, or market-timing, or what Investors Business Daily says the market is going to do next week, etc. All posts on these topics will be moved to the off-topic forum . Let’s all try to keep our board focused on analyzing and discussing SaaS stocks, and useful to us. We have created something great here and let’s not kill it with a lot of extraneous posts.
This board has rules. It’s not like other boards. If you don’t follow the rules your posts are likely to be deleted, and if necessary you may even get barred from the board. That’s just the way it is. Life is hard sometimes. This board is for the discussion and analyzing of individual SaaS growth stocks in a cooperative and courteous manner and, secondarily, the philosophy around investing in them. That means that there are subjects that are Off-Topic for this board. There’s nothing wrong with them as topics. There are other boards where they are welcome, or even the chief topic of conversation. These include politics which, however, quickly spins out of control and ends up with people who had been amiably working together discussing a stock, suddenly viciously arguing. Political posts will be immediately deleted. Investing subjects that are off topic include technical analysis and option trading subjects, including describing the details of your option positions, or value investing, or turn-around investing, or dividend or income investing, or market-timing, or what Investors Business Daily says the market is going to do next week, etc. All posts on these topics will be moved to the off-topic forum . Let’s all try to keep our board focused on analyzing and discussing SaaS stocks, and useful to us. We have created something great here and let’s not kill it with a lot of extraneous posts.