Paul Spinnler
Well-known member
![petapixel.com](https://petapixel.com/assets/uploads/2024/01/Capture-One-Lays-Off-Staff-Amid-a-Significant-Internal-Restructure.jpg)
Capture One Lays Off Staff Amid a 'Significant' Internal Restructure
It has been a rough year for Capture One.
I mean glad to see that the market is responding a bit to this SaaS topic in an adequate way and that C1 seemingly is under cost pressure due to their strategic choices in these times. Their whole approach to the topic and the bait-and-switch thing is really not ok.
I didn't recollect all the ways C1 messed up (so the article is a good reminder of the timeline of events surrounding the introduction of the subscription model), but I haven't spent a buck on it since they announced the new changes because I feel it quite uncool that you only ever get the features you right at the time of purchase bought.
Its geared full throttle to move everyone into subscription and the reason for that is that the owner, Axcel, aims to sell this business separately at a high multiple. Software businesses with recurring revenues from subscriptions have proven to squeeze customers better (customer lifetime value or LTV is higher), which is why they are worth more in the financial world. E.g. multiple above 15-20x EBITDA vs. maybe 10-15x EBITDA for just normal licenses ... problem however is that investors due diligence these businesses on the retention metrics and this is, in the consumer photo market of today, where C1 probably struggles. So the higher multiple spiel only pans out if the retention and adoption metrics are good ... which I believe they aren't. Also not sure the additional mobile C1 is a driver for best-selling this ...
Ie its one thing to sell B2B compliance solutions which is are super sticky and resilient sales in a downmarket compared to forcing expensive subscriptions on the average enthusiast + pros who don't want to add monthly expenses given they are struggling already with cost of living and difficult livelhood as a photographer in today's world.
Cutting costs now before doing this is called "dressing up the bride". They are probably getting valuation multiples below or at the same level what they paid for in 2019 given markets changed, so their only hope to make a good return is by increasing customers and selling fast.
Could be that we'll see a sale of the company this year as in private equity the returns decrease each year of an investment if you can't sell it and with markets improving slightly they could now aim to dress up the firms under the P1 umbrella the best way possible way to find a new buyer.
"Dressing up the bride" for a sale means:
1) New product pipeline to show growth tangent for future owner
2) Cut costs where possible to improve profit metrics underlying the valuation
The only thing I hope is that the CEO, who is probably the largest minortiy shareholder at this stage, doesn't again go for private equity as it starves out the photo business.
In any case – I've been waiting for some significant upgrades on the C1 side since the subscription model, but so far no luck, so I am stuck with the old version for my S files and the new one for the P1 files – which is cool, still.
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