Category: SaaS
December 1, 2023 Meritech Capital : Public SaaS Comparables Table
- 93% of companies have YoY Implied ARR growth <40%
- 74% of companies have FCF margin <20%
- 26% of companies are achieving Rule of 40
- 39% of companies have returned <1x since IPO
CATEGORY: profitability, SaaS, valuation
November 16, 2023 SaaS Capital : What is the Average Deal Size for Private SaaS Companies in 2023?
Deal size is correlated with company size. For example, companies with ARR $1 – $3 Million in ARR show a median ACV of $16,197 while companies with ARR of $10 – $20 Million show a median ACV of $35,831. For all but one company size (those with ARR $5 – $10 Million) ACVs generally declined vs. 2021. (read more…)
CATEGORY: growth, resilience, SaaS
November 8, 2023 Open View Partners : 2023 SaaS Benchmarks Report
- While growth is much harder to come by in 2023, there are pockets of resilience amid the doom-and-gloom.
- The North Star for many has become ARR per FTE, which reflects the productivity of your team. We’ve seen big increases in ARR per FTE year-on-year.
- Positioning yourself as “AI” doesn’t impact growth. But monetizing AI does.
- To drive productivity, companies need efficient product-led growth (PLG), expansion within the customer base, and improved operations.
CATEGORY: leadership, profitability, resilience, SaaS
October 5, 2023 SaaSletter : 2010 – 2021 SaaS Industry-wide Benchmarks
Positively, this speaks to:
- SaaS applications generating positive customer ROIs to earn land and expand within orgs
- Broadening of product suites, leading to larger “expansion surface areas”
- The increased revenue-generation emphasis of customer success as a function
- Installed base math: the early era of SaaS had definitionally a small installed base to expand upon. Whereas today’s SaaS vendors have decades of installed bases to expand from →that historic-to-new ratio imbalance mathematically will favor expansion as a driver.
- Challenges in winning new logos: CAC CAGR of 7%
- With field sales getting harder: CAC CAGR of 7% (vs 4% CAGR for inside sales)
CATEGORY: profitability, resilience, SaaS
August 29, 2023 Iconiq Capital : The New Era of Efficient Growth
2023 has seen continued deterioration in top-line performance as the macro environment continues to be challenging for SaaS businesses. While topline growth has fallen across the board, early-stage companies saw the biggest impact to ARR growth, falling from peak levels of 200%+ YoY growth to 111% YoY as of 1H 2023. Median net dollar retention has also been impacted, falling from peak levels of 130+% in 2017 to ~105% as of 1H 2023. As of June 2023, forward revenue growth is the primary driver of valuation in the public markets. Coefficients measure the slope of the linear relationship between different variables. From December 2021 to June 2022, the relative importance of profitability increased significantly. FCF margin had a larger impact on public multiples than revenue growth in June 2022, as shown by the greater coefficient in the table above. However, the balance has shifted back towards growth as the primary driver of valuation. As of June 2023 revenue growth once again had a larger impact on public multiples than FCF margin. (read more…)
CATEGORY: growth, profitability, SaaS, valuation
August 8, 2023 Bessemer Venture Partners : The Cloud 100
The macro background has nonetheless hurt the average Cloud 100 company. For years we saw growth rates increase, but in 2023, the average growth rate for a Cloud 100 company – the 100 best private companies in the world – has been nearly halved. After years of defying gravity and reaching record highs, headwinds eventually caught up with Cloud 100 fundamentals. The average Cloud 100 revenue growth rate fell significantly to 55% within the year, with the growth rate of the top quartile companies falling to 70%, once again reinforcing the extremely challenging year that the world’s best cloud companies had to deal with. (read more…)
CATEGORY: growth, resilience, SaaS
July 26, 2023 SaaStr : What’s the Average Deal Size for SaaS Companies?
- Public SaaS companies that focus on SMBs have an ACV of about $4,800
- Public SaaS companies that focus on mid-market have an ACV of about $40k
- Public SaaS companies that focus on enterprise have an ACV of about $220k
May 12, 2023 SaaS Capital : SaaS Capital 2023 B2B SaaS Retention Benchmarks
Across all SaaS companies, the 2023 median net retention is 102%, which is unchanged from 2022. Median gross retention is 91%, also unchanged from the previous year’s survey. One of the biggest takeaways this year is the evolving relationship between median net revenue retention and ACVs. Historically, the data showed little correlation. Over the last few years, we have seen signs that the highest ACVs showed higher median net revenue retention. This year’s data showed a direct, positive relationship with median net revenue retention rising as ACVs increase. Growth rate continues to be positively and exponentially correlated with net revenue retention, while gross revenue retention is a “table stakes” benchmark – to have a shot at performance parity with your peers, GRR must be at least 90%. Companies that primarily use month-to-month terms and annual contracts show median net revenue retention and median gross revenue retention that is essentially the same at 100% and ~90% respectively. (read more…)
September 24, 2022 Bessemer Venture Partners : State of the Cloud 2022
With inflation on the rise, interest rates climbing, and geopolitical uncertainty, 2022 was met by stormy conditions in the form of a dramatic market correction. The BVP Nasdaq Emerging Cloud Index slipped back to 2020 levels, dropping over 40% in value. (As of May 2022, the cumulative market capitalization of the public cloud is approximately $1.4 trillion). However, despite this drop—or what we’ve called “The SaaSacre” at Bessemer—this cohort of cloud companies still exhibits strong fundamentals (e.g., 41% average growth rate, 71% average gross margin, 45% average efficiency score.) (read more…)
April 30, 2021 Jason Lemkin : Maybe Every SaaS Contract Should Have An Automatic Out Clause
In the long run in SaaS, any customer that churns was never really a customer at all — unless you get them back later. Maybe make onboarding, and buying, as simple as possible. Maybe just let the customer buy, at a given price point, however they want to buy. Drive up your NPS, close the deal even faster. And maybe just let them cancel and leave whenever they want. Just give them a pro-rated refund, and move on. And say thank you for trying us. And let them know they can have this refund whenever they want, no questions (or not too many at least) asked. (read more…)
CATEGORY: product-market fit, SaaS