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There is no question, the SaaS industry is growing globally and across platforms.
Cloud-hosted applications have a 99% uptime
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
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
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%”
54% treat upselling and add-on sales as high priority
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 median annual unit churn for SAAS companies was 10% in 2016
Increases in revenue growth rates drive twice as much market-capitalisation gain as margin improvements for companies with less than $4 billion in revenues
The metrics that matter for each sales funnel, vary from one company to the next depending on the steps involved in the funnel
26% of SAAS companies with at least $15MM in 2015 GAAP revenue had a revenue growth rate + EBITDA margin of 40% or higher
How to Reduce Churn
High-growth companies are 8X more likely to reach $1 billion in revenues than those growing less than 20%.
In 2019, spending on IT services is expected to amount to 1,016 billion U.S. dollars worldwide
In 2018, the global tech spending is forecast to amount to 3,212 billion U.S. dollars.
Revenue Churn Rate = (RCR) (MRR at beginning of month – MRR at end of month) – MRR in upgrades during month / MRR at beginning of month
The boom in the industry is creating more jobs for techies. Data reveals there were 627,000 unfilled positions in tech in April 2017
SaaS, and other recurring revenue businesses are different because the revenue for the service comes over an extended period of time (the customer lifetime)
36% of SaaS businesses managed to reduce their revenue churn over the last 12-months
Growing faster has twice as much impact on share price as improving margins