Dutch software companies see profits and revenues increase

The Hague, November 12, 2021 – Software companies in the Netherlands have become increasingly profitable for ten years straight, which is largely thanks to strong growth in recurring revenue and implementation of SaaS models. This is evident from the Main Software 50, the ranking of successful Dutch software companies, which was presented yesterday evening in Amsterdam: 78 percent of the Main Software 50 companies achieved an EBITDA margin of more than 10 percent, while ten years ago this was only the case for 50 percent. At the top of the ranking is Amsterdam-based Textkernel, which develops HR software for job matching.

The Main Software 50 is the leading ranking for the most successful, non-listed software companies in the Netherlands. The ranking was first published in 2012, to give more attention to the important but often underexposed enterprise software sector. Each year, initiator and software investor Main Capital Partners indexes hundreds of companies against seven objective business metrics: revenue, revenue growth, EBITDA, revenue from cloud/SaaS services, recurring revenue, international revenue and revenue from partner channels.  The results are then checked by an independent research agency, Dialogic.

‘We want to show that the Dutch software sector is a healthy and growing market,’ says Pieter van Bodegraven, Managing Partner Benelux at Main. ‘This is important, because a healthy software industry contributes to the competitiveness of the Netherlands and strengthens the resilience of the economy.’

75% of revenue is recurring
Not only did EBITDA increase over the years, but the share of recurring revenue also rose from 54 percent in 2013 to 75 percent. Recurring revenue is an important indicator of a software company’s professionalism and the robustness of their business model. Van Bodegraven: ‘In recent years, many companies have made the transition from on-premise to cloud solutions with an associated Software as a Service business model. As a result, you see that recurring revenue from subscription models has increased significantly.’ The software companies in the rankings have also increased their productivity. They have achieved an average turnover of 126,000 euros per FTE in the 2021 edition. The revenue per FTE of the companies in the Main Software 50 ranking list has grown by about 20 percent over the past decade.

Overall Champions 2021: Textkernel, Convious and E-WISE
Five special awards were presented during the ceremony: the Overall Champions Award for the top 3, the Highest Growth Award for the company with the highest revenue growth and the Main Accelerator Award for the most promising startup. The number 1 of this edition, Textkernel, ranked 3rd in 2020. Textkernel is an international leader in HR software and uses machine learning to improve matching between people and jobs. The company is competing for the fourth time this year and was acquired by Main Capital Partners in 2020. On 2^nd place is the e-commerce software company Convious, that moved up from the 9th place last year. Next to the Overall Champions #2 Award Convious managed to win the Highest Growth Award for the second time, with a gross revenue growth of over 600 percent. E-WISE, an online continuing education platform for professionals, secured third place this year. The company participated for the sixth time and managed to place among the best 50 of the Netherlands for the third time.

Main Accelerator Award for flex platform Tigris
Besides familiar faces, there are a lot of new participants. That’s why this year, for the first time, the Main Accelerator Award was presented. The award is meant for the best performing company younger than 5 years with a turnover of less than 1 million euro. These companies usually do not rank in the Main Software 50, which typically lists larger, more mature companies. ‘The past few years a lot of new software companies joined the Dutch market and we see more and more entries from that segment. These promising, fast growers also deserve recognition for their good performance,’ said Van Bodegraven. Tigris, which develops software for the flex industry, managed to double its turnover in 2020 with a team of 14 employees and has the ambition to change the flex industry from the inside.

JavaScript, Python and AWS popular with young software companies
Main also analyzed the techniques used by the participants. Young software companies use fundamentally different tech stacks than older software companies. Among companies founded after 2015, programming languages Python and JavaScript and hosting platform AWS are especially popular. Older companies are more likely to program in C# and PHP, while Azure is the most commonly used hosting platform. Van Bodegraven explains: ‘JavaScript can be used for both frontend and backend. Many younger companies, founded after 2015, do not yet suffer from existing legacy and are taking advantage of it. Python is popular because it is widely used at colleges and universities, and in addition, developers have many libraries at their disposal.’

Main Capital Partners
Main Capital Partners is a strategic investor with an exclusive focus on enterprise software companies. Main has almost 20 years of experience in building strong software groups in the Benelux, the DACH-region and the Nordics. Main specializes in helping management teams within mature and growing software companies achieve sustainable growth by working closely together as a strategic partner. Main has a workforce of 45 employees working from offices in The Hague, Stockholm and Düsseldorf, offering support on a strategic and a pragmatic level. As of October 2021, Main Capital Partners has approximately €2.2 billion assets under management.

The full Main Software 50 ranking can be viewed here.