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

SaaS + Software
Statistic in Growth Strategy

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.

HubSpot

More SaaS + Software Stats

Internet sales-driven companies have a much greater reliance on marketing, with 65% of the median company’s CAC budget devoted to marketing

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

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

54% treat upselling and add-on sales as high priority

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%”

Unlike many other industries, if a software company grows at only 20%, it has a 92% chance of ceasing to exist within a few years

Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts

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

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

To establish a revenue or lead-commitment based on your funnel metrics and revenue-growth goals, work backward from the gross revenue amount that marketing is responsible for generating (generally around 40%)

More Growth Strategy Stats

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

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

Negative Churn and Expansion Revenue

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

To establish a revenue or lead-commitment based on your funnel metrics and revenue-growth goals, work backward from the gross revenue amount that marketing is responsible for generating (generally around 40%)

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

The average company booking professional services revenue on new deals is equivalent to 16% of the first year subscription value. Professional services margins are approximately 22%

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

The fastest growing SAAS companies averaged $250k in MRR and were only losing around 3.2% of that revenue each month to churn

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

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