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%”

Statistic Info

~26% of respondents with at least $15MM in 2015 GAAP revenue had a revenue growth rate + EBITDA margin of 40% or higher – “The Rule of 40%”, a popular benchmark for top SaaS company performance.

The median results of those respondents meeting or exceeding “The Rule of 40%” showed that they tended to report lower churn and lower CAC ratios, be more enterprise-focused with larger contracts, rely more heavily on field sales and more often report a vertical focus.

More SaaS + Software Stats

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

The fastest growing SaaS companies scale their organizations rapidly, growing their teams by an average of 56% each year

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

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

In 2017, IBM generated 37.8 billion U.S. dollars in global IT services revenue, making it the largest IT services company in the world in terms of net sales

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

Net-revenue churn improves with larger Average Contract Value (ACV), likely due to more structural churn among SMB customers and higher switching costs associated with larger contracts

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

SaaS businesses face significant losses in the early years (and often an associated cash flow problem)

Three uses for the SaaS Guidelines

More Growth Strategy Stats

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

At Facebook, 15 percent of tech roles are staffed by women

The largest SaaS companies (>$75million yearly revenue) attribute 2.5x as much new revenue to upselling than the smallest SaaS companies (<$1.25million): 28% versus 11%

To establish a revenue or lead-commitment based on your funnel metrics and revenue-growth goals, work backward from the gross revenue amount that marketing is responsible for generating (generally around 40%)

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

Invention is 10% inspiration and 90% perspiration.

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

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

The median annual contract value (ACV) was $25K, $21K, $21K, $20K in 2016, 2015, 2014 and 2013

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