Growth Rate (y/y)
Icertis is a subscription software-as-a-service (SaaS) company that sells access to its cloud-based contract lifecycle management (CLM) software via yearly enterprise contracts, charging based on the number of seats a company needs and the number of different products they use.
Factors like the number of contracts being managed, the degree of integration required with other systems, and the extent of usage across different departments within the organization may all further influence the price of implementation.
Icertis primarily employs two sales motions: direct sales to larger organizations through its dedicated sales team, and channel partnerships with global consulting and tech firms. These partnerships extend the company's reach and bolster its ability to provide comprehensive contract management solutions.
For example, buying Icertis Contract Intelligence via SAP Ariba will run companies $200K for the year and give them seats for 100 users.
Supporting these enterprise deployments are teams of sales engineers and account managers who assist with implementation, training, and ongoing support. A portion of Icertis's revenue is likely derived from these professional services, comparable to other SaaS companies in similar sectors.
Icertis customers today include Daimler, Airbus, Johnson & Johnson, Google and Microsoft.
Before end-to-end digitized contract lifecycle management (CLM) software such as Icertis's, contract management was primarily a manual or semi-automated process.
Contracts were typically managed using paper-based systems or basic digital tools, and they were often viewed merely as static legal documents rather than strategic business assets.
This traditional method was time-consuming, inefficient, and susceptible to errors and oversights, which could result in significant financial or legal risks.
Icertis's CLM software automates numerous stages of the contract lifecycle, reducing manual intervention, improving speed, and minimizing errors. This automation extends from contract creation, negotiation, execution, to management and compliance checks, streamlining the whole process.
Icertis's software can then connect the extracted contract data to procurement, enterprise resource planning (ERP), and human capital management apps. This integration offers a holistic view of the business operations and facilitates strategic decision-making.
The contract lifecycle management (CLM) market is highly competitive, with several SaaS companies vying for market share, including Adobe, DocuSign, Conga, Agiloft, Oracle, PandaDoc, and Ironclad.
For each of these platforms, offering a wide range of integrations to 3rd-party SaaS tools is key, because of how workflows in CLM touch on so many ancillary products. Ironically, the extent to which these tools have indexed on interoperability has now made it easier than ever for their customers to switch away from one tool to another.
Icertis's primary competition, DocuSign, has significantly invested in the CLM market through acquisitions like Chicago-based SpringCM ($220M) and Seal Software ($188M), whose AI capabilities for automating and analyzing legal contracts are now part of DocuSign Agreement Cloud.
Despite facing challenges with customer retention, DocuSign has seen growth in the number of high-spending customers and its international revenue. As of their Q1’23 earnings call, customers with annual spend above $300K grew 32% year-over-year to a total of 886. Dollar net retention for the quarter sat at 114%. International revenue grew faster than domestic—43% year-over-year to $144M.
Similarly, Adobe has its own CLM solution that is a part of Adobe Document Cloud. Adobe Document Cloud and DocuSign are closely matched in terms of annual revenue, but Adobe's CLM services only account for a fraction of its total revenues.
Adobe Document Cloud revenue for 2022 was about $2.38B—about 13% of Adobe’s total revenues of $17.6B.
The size of the addressable market for contract lifecycle management companies was estimated at $20B in 2021, and growing 30% year-over-year.
The growth of Icertis's underlying CLM software market is being driven by the broader digital transformation trend (as accelerated by COVID), the growing need for operational efficiency given tightening economic conditions, and the rising importance of compliance and risk management.
An Icertis survey found that 67% of 500 executives at Global 2000 companies felt like their digital transformations were not helping them get ahead of their competition.
But as more and more companies do invest in their digital transformations, they're turning towards software to improve their operations, and contract management is a critical area that benefits from digitization, driving increased demand for CLM software.
By automating their contract management through CLM software, companies can grow their contract velocity by 80%—63% of companies that use CLM say their negotiations are more profitable and proceed faster.
Contract management, being a labor-intensive process when done manually, represents an area ripe for improvement when it comes to operational efficiency. Across large companies, a McKinsey report pegged the cost of “leakage” due to unmet obligations embedded in contracts at 2%—the equivalent of $20M per year for a company spending $1B per year.
That’s added to the 5-40% of contract value that companies can end up throwing away every year by not incorporating features like rebates, volume discounts and price adjustments into their contracts.
Regulatory environments are becoming more complex, and businesses face higher risks related to non-compliance with contracts. CLM software helps manage these risks and ensure compliance by providing visibility and control over contracts.
Without CLM software, humans are required to stay on top of all the clauses in a contract, and missing one can expose companies to severe reputational and financial losses. One public company that Icertis worked with faced a customer lawsuit due to an oversight like this—and the company was forced to pay out millions of dollars to remedy the situation.
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