Growing faster has twice as much impact on share price as improving margins

SaaS + Software
Quote in Growth Strategy

Quote Info

Companies with earnings before interest, taxes, and amortization (EBITA) margins below 10 percent and growth rates below 20 percent have seen their market capitalization grow 14 percentage points more slowly than the market average. The data suggest that they can drive nearly twice as much value by pushing growth rates over 20 percent as they can by pushing EBITA margins above 10 percent. Companies with EBITA already in excess of 10 percent but top-line growth below 20 percent achieve a similar market-capitalization improvement by boosting their top-line growth above 20 percent.

There is, however, one notable exception to the idea that growth is all-important. When companies reach $4 billion in revenues or more margins become more important to value multiples.


More SaaS + Software Stats

Analysed 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

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

It’s common for startups to grow rapidly, doubling or tripling in size year over year, until they hit $5M in ARR

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

Cloud application services (SaaS) to reach $126 billions by the end of 2021

The median annual unit churn for SAAS companies was 10% in 2016

SAAS companies with >$250K median ACV book nearly 25% of their contracts at 3 years or longer

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

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

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

More Growth Strategy Stats

At Twitter, 10 percent of tech roles are staffed by women

High-growth companies offer a return to shareholders 5 times greater than medium-growth companies

orecasts suggest that global blockchain technology revenues will experience massive growth in the coming years, with the market expected to climb to over 23.3 billion U.S. dollars in size by 2023.

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business

In 2018, the global tech spending is forecast to amount to 3,212 billion U.S. dollars.

More than 1/2 of SAAS companies increased their spending on customer retention last year

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

It’s common for startups to grow rapidly, doubling or tripling in size year over year, until they hit $5M in ARR

Growth rate accelerates in the expansion stage ($2.5M – $10M ARR)

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

Looking for SaaS focused services?
SaaS Website Design
SaaS SEO Agency