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

Statistic Info

The SaaS landscape is ever changing, and its crucial for businesses to evolve their strategies and tactics –but without objective data on what works and what doesn’t, shifting strategies would be mere conjecture.

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Increases in revenue growth rates drive twice as much market-capitalisation gain as margin improvements for companies with less than $4 billion in revenues

In 2017, IBM generated 37.8 billion U.S. dollars in global IT services revenue, making it the largest IT services company in the world in terms of net sales

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

SaaS IPOs have more than doubled over the last 12 years

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; which may have a dramatically negative effect on your company’s growth. Source: Mckinsey

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

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

For a SaaS business of almost any scale, the valuation impact of better retention is in the tens of millions over time

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

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

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

Three uses for the SaaS Guidelines

Invention is 10% inspiration and 90% perspiration.

The median SaaS business loses about 10% of its revenue to churn each year and that works out to about 0.83% revenue churn a month

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

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

For a SaaS business of almost any scale, the valuation impact of better retention is in the tens of millions over time

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

The median SaaS business generates 16% of its new Annual Contract Value (ACV) from upselling to existing customers

All types of investment have grown, year-on-year, with the biggest growth during the seed stage of financing