Enterprise Software’s Laggards: Firms Growing Slowly And Still Burning Cash

It’s the age-old refrain in American business: You have to spend money to make money. And it’s particularly true of the tech industry, where startups pour millions into untested new businesses and technologies. Investors usually don’t mind companies burning cash as long as they’re growing quickly—but some enterprise software companies aren’t growing fast even after burning money for many years.

The Information looked at 90 of the best known publicly traded enterprise software companies tracked by Meritech Capital. Of the group, 29 burned cash in the last 12 months. In theory, because they’re investing heavily in building their businesses, this group should be growing faster than the companies that are generating cash. But in fact, 12 of the cash-burning firms showed slower growth than the median revenue growth rate of the entire group.