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

From InsightSquared
Statistic in SaaS & Tech Growth Strategy

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

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

Achieving a SaaS Quick Ratio of 4 is a good benchmark for young, high-growth companies but the equation changes as those companies reach scale

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

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

When venture capitalists participate in seed rounds, the average round size is 3x larger

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

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

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

Smaller SAAS companies reported more frequent use of third-party providers as their primary application delivery method, while the largest companies were more likely to use self-managed servers

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

More SaaS & Tech Growth Strategy Stats

The median startup spends 92% of first year revenue on customer acquisition, taking 11-months to payback their Customer Acquisition Cost

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

Japanese company Hitachi accounted for three percent of the world’s market for diagnostic imaging in 2017.

SaaS organizations are now operating in over 100 countries

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

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

SaaS, and other recurring revenue businesses are different because the revenue for the service comes over an extended period of time (the customer lifetime)

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

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

Cloud-hosted applications have a 99% uptime