Software and online services are in a period of dizzying growth

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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.

More SaaS + Software Stats

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

The fastest growing SaaS companies raise an average of $9.5M in Series A funding

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

Even if a software company is growing at 60% annually, its chances of becoming a multibillion-dollar giant are no better than 50/50

80% of venture capital investments take place in the enterprise

Negative Churn and Expansion Revenue

Getting paid in advance is really smart idea if you can do it without impacting bookings, as it can provide the cash flow that you need to cover your cash problem

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

A 2017 SaaS Capital survey showed that young companies actually have higher retention rates than more mature SaaS businesses

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%”

More Growth Strategy Stats

55% of SaaS companies rate Customer Retention as the key metric to measure

In 2018, the global tech spending is forecast to amount to 3,212 billion U.S. dollars.

SaaS IPOs have more than doubled over the last 12 years

Women in western countries use the internet 17 percent more than their male counterparts

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)

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

Companies with longer contracts (2+ years) reported the lowest annual unit churn

47% of millennials want to work at diverse companies, according to a recent study.

The very best SAAS business has a negative churn rate and will have a Dollar Retention Rate of greater than 100%

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