Astea is one of those “non-sexy” SaaS companies you’ve likely never heard of. The company helps companies who put technicians in the field to service things like air conditioning, heating, or any other maintenance of physical property.
Astea technology connects the technician to the warehouse logistics so the right technician shows up at the right place at the right time.
The company was founded in 1979 and went public in 1995- good or bad timing depending on how you look at it.
Today the company does $29m in revenues split across SaaS and professional services. Since many companies go through this transition, I wanted to sit down with the COO to understand how this transition occurred.
How Is Astea Revenue Split Today?
The company makes money from 3 different revenue streams. License and maintenance fees makes up $8m annually.
They charge per user per month on their SaaS model which makes up another $8m annually.
Services make up the last $12m annually and is the largest revenue stream.
How Do You Bill For These Products?
Astea has 400 customers today that pay, on average, $6k/mo to make up the $29m in annual revenues. On the SaaS side, they bill $50-75 per seat on 3 year contracts in addition to a 6-9 month setup fee on their enterprise clients with $250k+ annual contract values.
Growth wise, the company is under performing at 11% yoy revenue growth. For a publicly traded SaaS company, you want to see this number in the 50%+ range until $100m+ in ARR then something in the 30% range ongoing. E40 metrics capture this well.
Part of the reason for the slow growth is that Astea isn’t pure play SaaS. Its trying to transition though and I think there’s likely significant enterprise value tied up in the company that a SaaS minded CEO or investor could come in and unlock.
Where is Astea driving most of its 11% yoy growth?
Most new revenue is coming from upgrading historical customers, earning more wallet share on current customers.
In first 6-9 months customers mainly pay for setting up the software system in a professional services format. Most customers start with 50 users for launching the Astea project. This service revenue more than makes up for CAC.
SaaS revenue is low in the early lifecycle of a customer.
Once Astea goes live, they’ll add up to several thousand users which juices SaaS revenue while professional services work stops.
Over the first 2 years, big expansion occurs with around 100% yoy contract growth. In year 2, contract growth flattens until year 3 when expansion comes from crosselling customers new product lines.
Astea has 200 Employees, Did $26m in 2017, $29m 2018
The company took on no real investors until their IPO in 1995 where they opened at $106.25 in the height of the dot com boom.
Things crashed and today they trade at $5.86:
They are testing the waters now as they consider issuing more stock to raise more capital.
In the meantime, SaaS first companies like BadgerMapping are breaking $3m in ARR as they help field sales reps manage logistics, timing, and schedules as they’re driving around in their cars trying to hit quota.
BadgerMapping isn’t a direct competitor but is a strong sign that if Astea can figure out how to scale their SaaS solution, there’s a hungry market ready to pay.
