October, 2014 - Over the last decade, Software-as-a-Service (SaaS) has become the de-facto software delivery model for most sectors. As SaaS startups have matured, we have seen a run of IPOs and M&A transactions involving these companies in recent years. We are often asked the questions – (i) what are the key valuation drivers for the SaaS companies? (ii) what are the key financial/operating metrics that investors care about? and (iii) what are some of the key trends/considerations which will drive SaaS in the near future? In this report, we will address these questions and also explore what happens to a company with a perpetual license model when it decides to transition to a SaaS model, by leveraging data from the public markets and by drawing from our SaaS experience.