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

Smaller SAAS companies reported more frequent use of third-party providers as their primary application delivery method, while the largest companies were more likely to use self-managed servers

Net-revenue churn improves with larger Average Contract Value (ACV), likely due to more structural churn among SMB customers and higher switching costs associated with larger contracts

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

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

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

When venture capitalists participate in seed rounds, the average round size is 3x larger

Even if a software company is growing at 60% annually, its chances of becoming a multibillion-dollar giant are no better than 50/50

High-growth companies are 8X more likely to reach $1 billion in revenues than those growing less than 20%.

The very best SAAS business has a negative churn rate and will have a Dollar Retention Rate of greater than 100%

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

More Growth Strategy Stats

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

It’s 4x cheaper to upsell existing customers than acquire new customers: costing just $0.28 to acquire an additional dollar of revenue

47% of millennials want to work at diverse companies, according to a recent study.

80% of venture capital investments take place in the enterprise

The average SaaS company spends just 6 hours determining their pricing strategy

Achieving a SaaS Quick Ratio of 4 is a good benchmark for young, high-growth companies but the equation changes as those companies reach scale

A 2017 SaaS Capital survey showed that young companies actually have higher retention rates than more mature SaaS businesses

36% of SaaS businesses managed to reduce their revenue churn over the last 12-months

Customer Segmentation analysis will help point out which are your most profitable segments

The median cost for a SaaS company to acquire a dollar of new customer revenue is $1.18