Revenues are not created equal.
In the world of SaaS (Software as a Service) and financial operations services there is a big difference between the quality of income. In this article we will take a look at how the revenues of Bricknode are composed using the numbers from our latest financial reports.
The most valuable type of income is what is called recurring income where those revenues can be counted on to renew automatically month by month and year by year without any new efforts being made or hours being sold. If income is associated with hours of labour being produced the income is worth a lot less because they will not scale and allow larger margins as the business grows.
Think about it, would you rather own a business where you know that the income will continue to flow in even if you spend some time with near and dear or where you have to get up and put in hours of work to receive that income?
This is the reason why income generated from software subscriptions are valued a lot higher than revenues from consultancy work or support hours.
At Bricknode we are incredibly proud to be able to say that over the past year (Q2 2021 – Q1 2022) 94.33 % of our revenues came from recurring revenues!
Looking even deeper we can see that almost 75 % of those revenues came from our main software product called Bricknode Broker while more than 20 % came from Bricknode Lending which is the second software vertical that we have launched to complement our mainstay product suite.
The remaining 4.72 % came from what we classify as “Support” but even in this category there is long term value to be found. Let’s be clear about one thing, Bricknode is not a consultancy firm. We only focus on building long term value through recurring revenues within areas where we see a need for better financial services and tools.
From time to time we get the opportunity to expand our systems coverage in alignment with immediate needs from our customers. When this happens we can rearrange the priorities within our roadmap and receive additional income for building out our platform in this certain area. This is what makes up a big part of the “Support” income together with general tasks that we might conduct to help our customers to succeed.
As SaaS providers within an enterprise segment we have all been there, trying to generate income while building out a platform. A lot of companies never make it past the “consultancy-phase” and cannot build enough value through software engineering that customers are prepared to pay thousands of euros per month to use. At Bricknode it took many years to make the shift from having to conduct loads of labour and configurations for our customers on a daily basis into being operators of a real SaaS platform within wealth management, financial securities administration and lending.
Depending on the verticals and the price level of each product the length of the sales cycles differ. Bricknode Broker is a huge enterprise offering but with a very scalable pricing model that fits both small and large financial institutions, our job now is to really get the market to understand this and how easy and low risk it actually is to sign up for a service like Bricknode Broker. With Bricknode Broker we build extremely long relationships with our customers and that is why the revenues generated from this area is worth the most in the industry.
On the other end of the spectrum we have our brand new product called Bricknode Investment Manager which is a very “light” product compared to Bricknode Broker but fits nicely into our total product portfolio. The income per unit sold of Bricknode Investment Manager brings in a lot less money than Bricknode Broker but in contrast it caters to a market which is a lot broader with many more potential customers.
At Bricknode we are building a real powerhouse of great valuable services and tools based on generating recurring revenues valued at the top of the industry. We are incredibly inspired by the fact that we have almost reached 95 % perfect recurrence this early in our journey. With more add-ons and integrations constantly being added to our marketplace and with two brand new verticals (Bricknode Deposits & Savings and Bricknode Investment Manager) just being launched Bricknode will continue its long term journey to focus on extreme quality of income where margins can expand exponentially as we grow.