Software and online services are in a period of dizzying growth

SaaS + Software
Quote in Growth Strategy

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

Investment in marketing automation tools is expected to reach $25 billion by the year 2023

More than two thirds of SAAS companies experienced annual churn rates of 5% or higher

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%”

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Negative Churn and Expansion Revenue

The best SAAS businesses have a LTV to CAC ratio that is higher than 3, sometimes as high as 7 or 8

As with unit churn, companies with longer contracts (2+ years) tend to report lower annual dollar churn

Cloud-hosted applications have a 99% uptime

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

SAAS companies invest between 80% and 120% of their revenue in sales and marketing in the first 5 years of their existence

More Growth Strategy Stats

SAAS companies need to track the number of visitors, trials and closed deals; And also track the conversion rates, with the goal of improving those over time

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%”

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

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

The median Customer Acquisition Cost (CAC) for upsells is just $0.28 per $1, less than a quarter of the $1.18 spent to acquire $1 of revenue from a new customer

Cloud application services (SaaS) to reach $126 billions by the end of 2021

orecasts suggest that global blockchain technology revenues will experience massive growth in the coming years, with the market expected to climb to over 23.3 billion U.S. dollars in size by 2023.

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

SAAS companies invest between 80% and 120% of their revenue in sales and marketing in the first 5 years of their existence

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

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