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

Statistic Info

When we looked at the fastest growing SaaS companies in our study (those with a CAGR of over 50%) we found an average Quick Ratio of 3.9.

These SaaS companies averaged $250k in MRR and were only losing around 3.2% of that revenue each month to churn. They are, in other words, exactly the type of SaaS startup that Mamoon looks for when deciding where to invest.

And, as their high Quick Ratio implies, they have a great chance to continue growing quickly and healthfully, and eventually become one of those fabled SaaS companies with a run rate of more than $10 million.

However, once we started digging deeper, the story became a little more complicated (and more interesting).

More SaaS + Software Stats

How to Reduce Churn

The very best SaaS businesses have a negative revenue churn rate and will have a Revenue Retention Rate of greater than 100%

Software and online services are in a period of dizzying growth

26% of SAAS companies with at least $15MM in GAAP revenue had a revenue growth rate + EBITDA margin of 40% or higher.

When determining Sales Capacity, “it’s worth noting that some percentage of new sales hires won’t meet expectations, so that should be taken into consideration when setting hiring goals. Typically we have seen failure rates around 25-30% for field sales reps, but this varies by company. The failure rate is lower for inside sales reps. can be counted as half of a productive rep”

If the numerator of your quick ratio is growing that means your revenue is growing. It’s important to keep increasing revenue to counter any MRR (Monthly Recurring Revenue) that is lost to churn

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

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%

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

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

More Growth Strategy Stats

Companies that spend more on sales and marketing (as a % of revenue) generally grew at a faster rate than those that spent less

Software and online services are in a period of dizzying growth

26% of SAAS companies with at least $15MM in 2015 GAAP revenue had a revenue growth rate + EBITDA margin of 40% or higher

Customer’s lifetime value (LTV)= average revenue per user (ARPU) / monthly churn rate

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

80% of venture capital investments take place in the enterprise

Invention is 10% inspiration and 90% perspiration.

The boom in the industry is creating more jobs for techies. Data reveals there were 627,000 unfilled positions in tech in April 2017

Moving from $1.5 million with an eye towards $10 million in ARR is a tough a task and will take an excellent VP of sales to get you there

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