Quote Info

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

At a 35% CAGR, it takes 10 years for a SaaS company to grow from $5M to $100M in ARR

Account Churn Rate (ACR) = customers at beginning of month – customers at the end of month / customers at beginning of month

Improve Your Pricing Schedule And Turn More Profit

The fastest growing SaaS companies scale their organizations rapidly, growing their teams by an average of 56% each year

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

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

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

51% of large (revenue >$2.5million) SaaS companies use field sales as their primary method of distribution

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

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

More Growth Strategy Stats

Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts. Source: ForEntrepreneurs

The average company booking professional services revenue on new deals is equivalent to 16% of the first year subscription value. Professional services margins are approximately 22%

How to Reduce Churn

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

In all SaaS businesses there will likely come a moment where they realize that not all customers are created equal

In 2018, the revenue of General Dynamics amounted to nearly 36.2 billion U.S. dollars.

At Facebook, 15 percent of tech roles are staffed by women

As of December 2018, there were total 105,000 employees in Lockheed Martin, as compared to 126,000 employees in 2015.

The fastest growing SAAS companies averaged $250k in MRR and were only losing around 3.2% of that revenue each month to churn

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