Statistic Info

In the past, we have benchmarked the revenue per employee of large publicly traded SaaS companies and determined that the average is about $200k of revenue per person. But, that analysis examined revenue per employee that only one point in time.

High-growth companies scale their teams very quickly. In fact, the companies in the sample set grew their teams by 56% annually over five years, which nets out to about 8.5x growth, from 204 employees to 1750 employees on the median.

Despite the massive growth of these organizations, the best companies are able to maintain or even accelerate their revenue per employee. In fact, increases in revenue per employee as a company scales is an incredibly positive sign of the health of the business. It indicates that the company is achieving economies of scale. Those economies of scale may exist as a consequence of a strong brand, monopoly-like characteristics within their market segment, improving sales efficiency, increases in contract size, better rates of customer upsells, etc. But in all cases, it’s a hallmark of a company whose economics are improving with time.

Tomasz Tonguz

More SaaS + Software Stats

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

SAAS companies with >$250K median ACV book nearly 25% of their contracts at 3 years or longer

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

Internet sales-driven companies have a much greater reliance on marketing, with 65% of the median company’s CAC budget devoted to marketing

All types of investment have grown, year-on-year, with the biggest growth during the seed stage of financing

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

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

The median average contract length is 1.3 years and the average billing term is seven months in advance in 2016. Comparable to 2015, with average contract length shortening from 1.5 to 1.3 years and average billing period increasing by one month from 2015 to 7 months

Less than 20% of new revenue came from existing customers in the form of up-sell and expansion sales

Median annual gross dollar churn was 8%, 7%, 6% and 8% in 2016, 2015, 2014 and 2013

More Growth Strategy Stats

Because of the losses in the early days, which get bigger the more successful the company is at acquiring customers, it is much harder for management and investors to figure out whether a SaaS business is financially viable.

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

Is your SaaS business viable?

General Dynamics is a market leader in the aerospace and defense industry. In 2018, a total of 105,600 people were working at General Dynamics.

In 2017, Foxconn Technology Group achieved a net income of 135.37 billion New Taiwanese dollars, the equivalent to approximately 4.55 billion U.S. dollars.

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

54% treat upselling and add-on sales as high priority

in 2016, women-led companies received $1.46 billion in investments from venture capitalists. Male-led companies, on the other hand, received $58.2 billion

Growth rate accelerates in the expansion stage ($2.5M – $10M ARR)

56% treat “Existing Customer Renewals” as high priority