Why We Think They Could be Recession-Resistant Investments
In a challenging COVID-19 environment, the performance of our Software-as-a-Service (SaaS) holdings has led us to question whether these companies may offer the benefits of typical recession-resistant businesses but with potentially more sustainable growth. Here’s why:
- The traditional software business model has significantly evolved toward a SaaS model, which, for some companies, has resulted in stronger business economics and resiliency.
- A transition to the SaaS model can potentially unlock significant value for a business by addressing the shortcomings of the traditional software model, reducing costs, establishing a recurring revenue stream, and providing more pricing power.
- Pursuing a SaaS model is a complex process and demands significant upfront investment, but if successful, can result in higher margins and more consistent revenues.
- In an accelerated digital-first environment, we believe software companies have become even more mission critical to their customers both professionally and personally.
Important Disclosures
The information provided in these materials should not be construed as a recommendation to purchase or sell any particular security. There is no assurance that any securities discussed herein will remain in the portfolio at the time you receive these materials or that the securities sold have not been repurchased. The securities discussed do not represent the entire portfolio. It should not be assumed that any of the securities transactions or holdings discussed were or will prove to be profitable or that any investment recommendations we make in the future will equal the investment performance of the securities discussed herein.
Past performance is not indicative of future results. The information provided in these materials is not intended as a guarantee of profitable outcomes. The opinions and estimates expressed herein constitute the judgment of Polen Capital and are subject to change without notice or update, including any forward-looking estimates or statements which are based on certain expectations and assumptions.