Software's Top 10 Rising Stars

By Robert Hertzberg  |  Posted 07-09-2007

Software's Top 10 Rising Stars

If you thought every piece of software worth looking at came from Microsoft, Google or Oracle, we're here to tell you you're wrong. There are plenty of small companies developing interesting software—they're just having a heck of a time making any money at it.

That's one of things Baseline discovered when it looked at the universe of public U.S. software companies with sales of less than $150 million. The resulting snapshot—a corollary to our June survey of the 40 fastest-growing big software companies—suggests that many small public software companies are unprofitable. Not surprisingly, many of them also have thinly traded stocks, the sort you'd be more likely to find in the Pink Sheets than on the New York Stock Exchange.

The small software companies that look healthiest—with sales approaching or exceeding $100 million—have carved out niches for themselves in areas like automating corporate travel or helping with corporate marketing. Our slide show describes these companies in more detail.

Slide show of 10 fast-growing small companies

Methodology: How we developed our list

Methodology

: How we developed our list">

To identify 10 of the fastest-growing small software companies, Baseline started with a list of companies that produce pre-packaged software and had less than $150 million in sales in their penultimate fiscal years.

Our calculations of percentage revenue growth in the slide show are based on a comparison of each company's revenue in its most recently reported full fiscal year, versus the previous year. Several of these companies are on June fiscal years and will report numbers for their 2007 fiscal year in a matter of days.

Baseline made some editorial judgment calls, including eliminating companies whose financial results were in doubt because of possible restatements. Our list of fast-growing small companies is intended to be representative, not definitive.