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Year-old companies are turning down billion-dollar buyouts in the hopes of multibillions in a few months. But we have seen similar industry phases before, and they have often ended with growth and valuations fizzling out. The industry’s booms and busts make growth, an essential ingredient in value creation, difficult to understand. To date, little empirical work has been done on the importance of revenue growth for software and Internet-services companies or how to find new sources of growth when old ones run out.

Mckinsey

More SaaS + Software Stats

The median annual contract value (ACV) was $25K, $21K, $21K, $20K in 2016, 2015, 2014 and 2013

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

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

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%)

Since churn is so important, wouldn’t it be useful if we could predict in advance which customers were most likely to churn?

High-growth companies offer a return to shareholders 5 times greater than medium-growth companies

The statistic shows the worldwide IT spending on enterprise software from 2009 to 2020.

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

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

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

More Growth Strategy Stats

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

High-growth companies are 8X more likely to reach $1 billion in revenues than those growing less than 20%.

Revenue Renewal Rate= (MRR up for the renewal at beginning of month- MRR not renewed at the end of month)/ MRR up for renewal at beginning of month)

At Twitter, 10 percent of tech roles are staffed by women

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

High-growth companies generate 60% fewer sales opportunities than low-growth companies

Gross dollar churn among companies with an internet go-to-market strategy saw a meaningful increase, up from 8% in 2015

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

In 2017, IBM generated 37.8 billion U.S. dollars in global IT services revenue, making it the largest IT services company in the world in terms of net sales

For a SaaS business of almost any scale, the valuation impact of better retention is in the tens of millions over time