Here’s more proof that companies are going crazy over cloud services

 

Bessemer Venture Partners’ Byron Deeter just published a stunning presentation on the state of the cloud industry.

In the report, he identifies some interesting trends and metrics that will help you understand how fast the space is growing.

Over the past decade, cloud services – the term used to describe things like software and infrastructure enabled over the web, instead of physical installations – has been all the rage. The following slides by Deeter are further proof that the cloud won’t be slowing down anytime soon.

The sheer value of public cloud companies has grown significantly over the past 7 years, showing how upbeat investors have been about them. Salesforce, one of the early pioneers in this space, saw its market cap blossom to over $50 billion in that period. In aggregate, the total cloud companies’ market cap has jumped over 7X since 2008.

And a lot of these cloud companies are generating massive revenue. In 2008, the total cloud revenue was around $5.6 billion. Last year, Salesforce alone had $5.4 billion in revenue, while the total sales by all cloud companies (including both public and private companies) exceeded $56 billion. That number is expected to hit almost $128 billion by 2018. There are still some questions around their profitability, but Deeter argues growth is the best indicator to gauge a cloud company’s worth.

To see how cloud software is taking over legacy software, look no further than the CRM space (software for sales and marketing people). Half of CRM revenue will come from cloud software and it will only continue to grow in the next two years. Salesforce, the company that pretty much created the cloud CRM space, is already the market leader.

But Deeter says we’re still in the early innings of this massive shift to the cloud. Only $39 billion of the total $1.4 trillion IT spend (about 3% of total) was allocated to cloud services in 2013. There are 28 cloud companies worth over $1 billion waiting to go public, with thousands more smaller ones in the pipeline.

Below are the 28 pre-IPO startups valued at more than $1 billion. Most of them are making real money with huge numbers of users around the world. It’s still hard to tell if any of them are making enough money to justify their outsized valuations, but it’s clear investors are placing a huge bet on them.

Cloud companies saw a huge market correction last year, when its value plummeted in a matter of couple months. But according to Bessemer’s cloud index that tracks 42 publicly traded cloud companies, they seem to have regained most of its value, and are close to reaching a peak point if it continues to grow at the current pace.

[“source – businessinsider.in”]