After $10M in ARR, the median growth rate slows to just under 50%

Statistic Info

The future of growth is product led. This isn’t merely the latest fad or buzzword. Data shows that companies leveraging a PLG strategy perform better on average –faster growth, higher margins, lower burn and stronger valuation multiples. As with many new operational strategies, OpenView believes product led growth will soon become the norm, making it table stakes for SaaS companies that want to win in their markets. What is your company doing to adapt to the product led growth revolution

More SaaS + Software Stats

The median TTM revenue growth rate + adj. EBITDA margin for publicly traded SaaS companies was ~37%, implying that just under one half met or exceed “The Rule of 40%”

Revenue per employee has been steadily increasing in SAAS companies. It serves as a great longitudinal measuring stick to understand the increasing or decreasing efficiency of the business

If you are charging $500 per month, you can afford to spend up to 12x that amount (i.e. $6,000) on acquiring a new customer

The very best SAAS companies keep monthly revenue churn at around 0.58%, that’s only about 7% revenue churn a year

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

Is your SaaS business viable?

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

The fastest growing SaaS companies raise an average of $9.5M in Series A funding

If a software company grows at 20% annually, it has a 92% chance of ceasing to exist within a few years

Since churn is so important, wouldn’t it be useful if we could predict in advance which customers were most likely to churn?

More Growth Strategy Stats

SaaS businesses face significant losses in the early years (and often an associated cash flow problem)

In 2017, Foxconn Technology Group achieved revenue of 158.15 billion U.S. dollars.

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

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

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

The median average contract length is 1.3 years and the average billing term is seven months in advance in 2016. Comparable to 2015, with average contract length shortening from 1.5 to 1.3 years and average billing period increasing by one month from 2015 to 7 months

Internet sales strategies are the only sales method to see a decline in CAC, dropping from $0.54 to $0.42 between 2014 and 2015

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; this will become a major drag on growth

Customer’s lifetime value (LTV)= average revenue per user (ARPU) / monthly churn rate

As with unit churn, companies with longer contracts (2+ years) tend to report lower annual dollar churn