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

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As with unit churn, companies with longer contracts (2+ years) tend to report lower annual dollar churn. Companies with shorter contracts (under 2 years) saw increased dollar churn compared to last year; contracts 2 years or longer were relatively consistent with prior survey results.

By definition, non-renewal rates are higher than gross dollar churn rates. However, it is interesting to see that the non-renewal rates are also higher for shorter duration contracts.

More SaaS + Software Stats

SaaS IPOs have more than doubled over the last 12 years

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%”

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

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

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

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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.

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 startup spends 92% of first year revenue on customer acquisition, taking 11-months to payback their Customer Acquisition Cost

SaaS companies in the $7.5MM-$15MM range are among the fastest growers

More Growth Strategy Stats

General Dynamics is a market leader in the aerospace and defense industry. In 2018, a total of 105,600 people were working at General Dynamics.

Negative Churn and Expansion Revenue

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

The average company gets 16% of new ACV sales from up-sells and expansions, though companies with revenue between $10MM-$40MM are relying more heavily on up-sell and expansions

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

Is your SaaS business viable?

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

Software and online services are in a period of dizzying growth

26% of SAAS companies with at least $15MM in 2015 GAAP revenue had a revenue growth rate + EBITDA margin of 40% or higher

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