Quote Info

Every year in a SaaS business, there are three elements that contribute to how much ARR will change relative to the previous year:

What happened with new customers added in the year (or month):

  • New ARR (or MRR)

What happened in the installed base of customers:

  • Churned ARR (or MRR) (from existing customers that cancelled their subscription. This will be a negative number.)
  • Expansion ARR (or MRR) (from existing customers who expanded their subscription)

The sum all three of these makes up your Net ARR or MRR Bookings

More SaaS + Software Stats

Smaller SAAS companies reported more frequent use of third-party providers as their primary application delivery method, while the largest companies were more likely to use self-managed servers

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

When determining Sales Capacity, “it’s worth noting that some percentage of new sales hires won’t meet expectations, so that should be taken into consideration when setting hiring goals. Typically we have seen failure rates around 25-30% for field sales reps, but this varies by company. The failure rate is lower for inside sales reps. can be counted as half of a productive rep”

While field sales remains the most popular way to sell for companies >$2.5MM revenue, companies with <$2.5MM revenue tended to use inside sales as their primary mode of distribution

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

The largest SaaS companies (>$75million yearly revenue) attribute 2.5x as much new revenue to upselling than the smallest SaaS companies (<$1.25million): 28% versus 11%

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

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

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

How Often Should The Pricing Committee Be Meeting And Making Changes?

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