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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

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

The best SaaS companies achieve 5-7% annual revenue churn – equivalent to a loss of $1 out of every $200 each month

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

73% of organizations indicated nearly all their apps will be SaaS by 2021

Net-revenue churn improves with larger Average Contract Value (ACV), likely due to more structural churn among SMB customers and higher switching costs associated with larger contracts

All types of investment have grown, year-on-year, with the biggest growth during the seed stage of financing

The median average contract length is 1.3 years and the average billing term is seven months in advance in 2016. Comparable to 2015, with average contract length shortening from 1.5 to 1.3 years and average billing period increasing by one month from 2015 to 7 months

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

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

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

More 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%)

In 2017, Foxconn Technology Group achieved a net income of 135.37 billion New Taiwanese dollars, the equivalent to approximately 4.55 billion U.S. dollars.

The median cost for a SaaS company to acquire a dollar of new customer revenue is $1.18

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 metrics that matter for each sales funnel, vary from one company to the next depending on the steps involved in the funnel

In 2017, the global adoption rate for biotech soybean amounted to 77 percent.

The median average contract length is 1.3 years and the average billing term is seven months in advance in 2016. Comparable to 2015, with average contract length shortening from 1.5 to 1.3 years and average billing period increasing by one month from 2015 to 7 months

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%”

The 2015 median revenue growth rate was 44%, while the median projected growth rate for 2016 is 48%

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