26% of SAAS companies with at least $15MM in GAAP revenue had a revenue growth rate + EBITDA margin of 40% or higher.

Statistic Info

art 1 of the survey results focuses on growth rates, go-to-market trends and cost structure. A new highlight in this year’s survey is data on balancing growth and profitability in SaaS companies, commonly known as The Rule of 40%.

You can find Part 2 results here. Part 2 compares application delivery methods, covers more on operational costs, and offers data on gross margins, contract terms, churn rates, capital requirements and accounting methods.

We’ve also created the forEntrepreneurs 2016 SaaS Infographic. The infographic pulls together major takeaways from the SaaS Survey and ties in advice and insights on key metrics.

As expected, many of the fastest growing companies are among the smallest. Eliminating them brings median growth rates down ~10 percentage points. Median growth rates are consistent with last year’s results. However, this year’s respondent pool was more evenly distributed.

Survey results indicate that companies in the $7.5MM-$15MM range are among the fastest growers. The median growth in this range is much greater than the median of companies half their size. Interestingly, there was a similar bump-up last year, but for companies between $5MM-$7.5MM.

More SaaS + Software Stats

How Often Should The Pricing Committee Be Meeting And Making Changes?

Growth trumps all

Less than 20% of new revenue came from existing customers in the form of up-sell and expansion sales

86% of SaaS businesses treat “New Customer Acquisition” as their highest growth priority, both in terms of executive support and funding available

Companies with longer contracts (2+ years) reported the lowest annual unit churn

Getting paid in advance is really smart idea if you can do it without impacting bookings, as it can provide the cash flow that you need to cover your cash problem

At a 35% CAGR, it takes 10 years for a SaaS company to grow from $5M to $100M in ARR

The best SAAS businesses have a LTV to CAC ratio that is higher than 3, sometimes as high as 7 or 8

The 2015 median revenue growth rate was 44%, while the median projected growth rate for 2016 is 48%

SAAS companies that are focused mainly on enterprise sales have higher levels of professional services

More Growth Strategy Stats

Analyzed by contract value, field sales are primarily evident for companies with median deals over $25K. Inside sales strategies are most popular for companies with $1K-$25K median deal sizes

Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts. Source: ForEntrepreneurs

Best-in-class SaaS companies achieve 5-7% annual revenue churn – equivalent to a loss of $1 out of every $200 each month

The very best SaaS businesses have a negative revenue churn rate and will have a Revenue Retention Rate of greater than 100%

In many SaaS businesses, sales reps play a key role in closing deals

Growth matters more than margin or cost structure

It’s 9x cheaper to retain existing customers than acquire new customers: costing $0.13 to acquire any additional dollar of revenue

The median Customer Acquisition Cost (CAC) for upsells is just $0.28 per $1, less than a quarter of the $1.18 spent to acquire $1 of revenue from a new customer

In 2017, the world invested around 3.4 billion U.S. dollars in small hydropower technologies, down from 3.9 billion U.S. dollars in 2016.

In contrast to these, the median annual churn rate for smaller, private SaaS companies with less than $10M in revenue is 20%