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

From Mckinsey
Statistic in SaaS & Tech Growth Strategy

So, growth is essential to value creation. But is it more important than other factors, such as cost control and operating excellence? We analyzed the relationship of cost structure to growth and found little or no correlation. In every major cost category—cost of goods sold, R&D, marketing and sales, and overhead—there is little or no correlation between the level of expense or investment and growth rate. Fast-growing companies can spend a lot or a little on these categories; it doesn’t seem to matter.

More SaaS + Software Stats

The very best SaaS businesses have a negative revenue churn rate and will have a Revenue Retention Rate of greater than 100%

As companies scale their growth engines, a slightly-above-average churn rate becomes harder and harder to offset with net new revenue growth, especially when the goal is to outpace it by 4x

The fastest growing SaaS companies scale their organizations rapidly, growing their teams by an average of 56% each year

Median annual gross dollar churn was 8%, 7%, 6% and 8% in 2016, 2015, 2014 and 2013

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

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

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

Negative Churn and Expansion Revenue

If the numerator of your quick ratio is growing that means your revenue is growing. It’s important to keep increasing revenue to counter any MRR (Monthly Recurring Revenue) that is lost to churn

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

More SaaS & Tech Growth Strategy Stats

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%)

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

Because of the losses in the early days, which get bigger the more successful the company is at acquiring customers, it is much harder for management and investors to figure out whether a SaaS business is financially viable.

Between the SMB and Enterprise customer types, the top-quartile performers not only have net-revenue churn that is 14% to 23% percentage less than the average performers but also have net-revenue churn that is negative in an absolute sense

The average Quick Ratio of fastest growing SaaS companies (those with a CAGR of over 50%) is 3.9: generating $3.9 in revenue for every $1 lost to revenue churn

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%”

Getting paid in advance is really smart idea if you can do it without impacting bookings, as it can provide the cash flow that you need to cover your cash problem

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

SAAS companies invest between 80% and 120% of their revenue in sales and marketing in the first 5 years of their existence

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