--- title: "What is a SaaS company? How they work, make money and the biggest examples" description: "What makes a company a SaaS company, how its revenue differs from license and services firms, and five large public examples with figures from filings." canonical: "https://saascron.com/saas-company/" language: "en-US" author: "Ricardo Machado" author_url: "https://saascron.com/author/ricardo-machado/" published: "2026-10-17T07:00:00-04:00" updated: "2026-10-17T07:00:00-04:00" category: "SaaS Business" tags: ["SaaS fundamentals", "Business model", "Recurring revenue", "Public companies"] --- # What is a SaaS company? How they work, make money and the biggest examples > What makes a company a SaaS company, how its revenue differs from license and services firms, and five large public examples with figures from filings. You keep reading that a company "is a SaaS company", and the phrase seems to explain its valuation, its hiring and its quarterly results. You want to know what actually qualifies a business for the label. A SaaS company sells access to software that it hosts and runs itself, and it earns most of its revenue from subscriptions that renew. The label is useful because it predicts how the business behaves: revenue arrives month after month, most costs come before the revenue, and keeping customers matters as much as winning them. This guide shows how to recognize one from its own numbers, with five large public examples. For what SaaS is from the user's side, see [What is SaaS?](https://saascron.com/what-is-saas/). ## A SaaS company in plain terms Think of three ways to make money from fitness. A sporting goods store sells you a treadmill once. A personal trainer bills you for each session. A gym charges a monthly membership and keeps the equipment running for you. Software companies have the same three options: - **License company:** sells a copy of the software, often with a yearly maintenance fee, and you run it on your own computers. The treadmill. - **Services company:** sells people's time to build, configure or run software for you, billed by the hour or project. The trainer. - **SaaS company:** runs the software on its own infrastructure and charges a subscription for access. The gym. Many large companies mix all three. What makes a company a SaaS company is the mix: subscriptions are most of the revenue, and the software runs on the company's side, not yours. ## How the money works A subscription changes the timing of everything. A license company books a large sale on the day you buy. A SaaS company earns the same customer's money in small pieces over years, as long as the customer stays. That timing creates the three habits you see in SaaS companies: - **They spend before they earn.** Sales, marketing and onboarding costs arrive in month one; the subscription pays them back over many months. - **They watch retention closely.** A customer who leaves after three months may never repay the cost of winning them. - **They report recurring revenue.** Many publish annual recurring revenue (ARR) next to revenue, because ARR shows the run rate of subscriptions at a point in time. For the month-by-month arithmetic of recurring revenue, churn and acquisition cost, see [the SaaS business model](https://saascron.com/saas-business-model/). For how SaaS companies set the price itself, see [SaaS pricing models](https://saascron.com/saas-pricing-models/). ## Five large public SaaS companies, from their annual reports The table lists five large companies whose annual reports separate subscription revenue from the rest. The selection criterion is that split, not a ranking; figures are from each company's latest annual report available in October 2026, in billions of dollars. | Company | Fiscal year ended | Total revenue | Subscription revenue | Subscription share | |---|---|---|---|---| | Salesforce | January 31, 2026 | $41.53 | $39.39 | 94.9% | | Adobe | November 28, 2025 | $23.77 | $22.90 | 96.4% | | ServiceNow | December 31, 2025 | $13.28 | $12.88 | 97.0% | | Workday | January 31, 2026 | $9.55 | $8.83 | 92.5% | | Atlassian | June 30, 2026 | $6.57 | $6.26 | 95.3% | Salesforce reports the line as "subscription and support". Every one of the five earns more than 92% of its revenue from subscriptions. The remainder is mostly professional services: setup, training and consulting. Note that the fiscal years do not line up. Salesforce and Workday close in January, Adobe in November, Atlassian in June. Compare growth within one company, not across them on one date. **Example:** the subscription share for Salesforce, from its [fiscal 2026 Form 10-K](https://www.sec.gov/Archives/edgar/data/1108524/000110852426000060/crm-20260131.htm), in millions: - Subscription and support revenue: $39,388. - Total revenue: $41,525. - Share: 39,388 / 41,525 = 0.949, or 94.9%. - The remainder, $41,525 - $39,388 = $2,137 million, is professional services and other revenue. The other rows use the same arithmetic: ServiceNow 12,883 / 13,278 = 97.0%; Workday 8,833 / 9,552 = 92.5%; Atlassian 6,262 / 6,572 = 95.3%; Adobe 22,904 / 23,770 = 96.4%, using the $23.77 billion total the company reported. You can run this check on any company that says it is SaaS. Open the annual report, find revenue by type, and divide subscription by total. If subscriptions are a minority, the company may sell SaaS products without being a SaaS company in the financial sense. ## Subscription is not always SaaS The table holds one trap. Adobe's subscriptions include Creative Cloud apps that you install on your own computer, with cloud services attached. That is subscription software, but not all of it is software hosted and run by the vendor. Atlassian, too, still sells some products that customers run themselves, alongside its cloud products. So the subscription share is an upper bound for how "SaaS" a company is. For a stricter reading, look for a cloud line in the filing. Atlassian, for example, reported cloud revenue of $1,213 million in the fourth quarter of fiscal 2026 alone ([results release](https://investors.atlassian.com/news/news-details/2026/Atlassian-Announces-Fourth-Quarter-and-Fiscal-Year-2026-Results/default.aspx)), which shows how much of its subscription business runs on its own infrastructure. ## Common mistakes 1. **Calling any company with a website a SaaS company.** An online store sells goods; a booking site sells services. Why it happens: both are on the internet and both have accounts. Instead: ask what the customer pays for and whether it is recurring access to software. 2. **Treating subscription revenue and SaaS revenue as the same.** Installed software sold by subscription is not hosted by the vendor. Why it happens: annual reports group them together. Instead: look for a separate cloud line, as in Atlassian's case. 3. **Comparing companies on one calendar date.** Fiscal years end in different months. Why it happens: news stories rank companies by "latest revenue". Instead: name the fiscal year next to every figure, as the table does. 4. **Using ARR as if it were revenue.** Atlassian reported subscription ARR of $6.6 billion and fiscal 2026 revenue of $6.57 billion, and the two measure different things. Why it happens: the numbers are close. Instead: treat ARR as a run rate at one moment and revenue as what was earned over the year. ## Sources - Salesforce, Inc., [Form 10-K for fiscal 2026](https://www.sec.gov/Archives/edgar/data/1108524/000110852426000060/crm-20260131.htm). - Adobe Inc., [Form 10-K for fiscal 2025](https://www.sec.gov/Archives/edgar/data/796343/000079634326000003/adbe-20251128.htm). - ServiceNow, Inc., [Form 10-K for 2025](https://www.sec.gov/Archives/edgar/data/1373715/000137371526000007/now-20251231.htm). - Workday, Inc., [Form 10-K for fiscal 2026](https://www.sec.gov/Archives/edgar/data/1327811/000132781126000014/wday-20260131.htm). - Atlassian Corporation, [Form 10-K for fiscal 2026](https://www.sec.gov/Archives/edgar/data/0001650372/000165037226000036/team-20260630.htm) and [fourth quarter fiscal 2026 results](https://investors.atlassian.com/news/news-details/2026/Atlassian-Announces-Fourth-Quarter-and-Fiscal-Year-2026-Results/default.aspx), August 6, 2026. ## In three sentences A SaaS company hosts and runs its software and earns most of its revenue from subscriptions that renew. You can test the label by dividing subscription revenue by total revenue in the annual report: Salesforce, Adobe, ServiceNow, Workday and Atlassian all land between 92.5% and 97.0%. Subscription share is an upper bound, because some subscriptions cover installed software, so look for a separate cloud line when the distinction matters. --- Canonical: