BVP Cloud Computing Index Crosses the $100 Billion Market Milestone

July 2013
Related Strategies: Cloud Computing

BVP Cloud Comp Sheets are updated weekly to include the Cloud Index and the key metrics of 30 public cloud computing companies; free and easily downloadable.

 
The Cloud Computing Industry hit a massive milestone this month, one that is likely to send shock waves throughout the software and technology industries. The top public cloud computing companies are now worth a combined market total of more than $100 billion. While large software incumbents might still try to frame cloud computing as a “fad” the numbers are hard to argue: With 30 large public companies collectively representing more than $100 billion in market capitalization and $12.5 billion in estimated 2013 revenue, the cloud computing industry has officially come of age.
 
To celebrate this milestone, Bessemer Venture Partners has released the “BVP Cloud Computing Index,” a comprehensive and dynamic market index (not unlike the S&P 500 and Dow Jones Industrial Average) that tracks the weekly market fluctuations of the leading public cloud companies. The BVP Cloud Index is up 68% from January 1st, 2012, outperforming the NASDAQ and S&P 500 by approximately 30%!
 
 
 
 
The M&A markets have also been active, with more than $10 billion of public cloud M&A in just 18 months and over $20 billion in the last two years.  This is just the beginning!  Even the broadest interpretation of the current Cloud market, giving incumbents credit for their internal cloud efforts, barely gets to $30bn of Cloud spend in 2013, per Gartner Research.  Cloud computing still represents only 2% of the total annual software, datacenter, and IT spend of $1.4 trillion, presenting these businesses with continued growth opportunities for the coming years. This also ensures that we will see continued acquisition interest from the legacy technology vendors under attack by the new cloud models, and excitement for more cloud IPOs on Wall Street.
 

Weekly Updates Available Online

 
Despite the public status of these leading cloud companies, it is difficult for industry executives and investors to access the financial metrics in a consistent format and to quickly ascertain the key insights from this data.  These issues are compounded by the fast-moving nature of the industry, which quickly renders data outdated.  To address these issues, Bessemer is providing updated public comps, operating metrics, and forecasts in a clean package anyone can download on a weekly basis via the BVP Cloud Comp Sheets. Furthermore, we’ve included cloud-specific metrics like retention, sales & marketing spend, and free cash flow that are more pertinent to subscription business models for experts who want to dive into the raw data. (View our 10 Laws of Cloud Computing and SaaS for more details)
 
 
Who Made the Cut?
 
 
 
Admittedly, it’s not easy to draw a clean line between the cloud “haves” and “have nots”.  Most savvy software companies are aggressively trying to dress themselves up as cloud companies, by either claiming to have a subscription business model and/or a hosted, multi-tenant architecture.  Cloud purists may take a hard line and suggest that only true multi-tenant, subscription business models like Salesforce.com, Workday, and Cornerstone OnDemand should be included.  However, on the margin, we have included some hybrid models (like Jive) in our BVP Cloud Index where the application may be web-hosted, single-tenant models (with each customer on a separate code base), but still charged on a subscription basis.  Despite benefiting from some of the tailwinds of the cloud industry and enjoying tremendous success in their own markets, we did reluctantly exclude the likes of Splunk, Tableau and Qlik, because they are neither multi-tenant technologies, nor subscription-based models.  Finally, this list is dynamic, and we welcome your feedback and thoughts as we continue to refine our methodology.
 
 
So What Has Happened in the Last 18 Months?