SaaSletter - 2010 - 2021 SaaS Industry-wide Benchmarks

Created via Pacific Crest + KeyBanc Historical Reports

Historical SaaS Benchmarks

First, the entire SaaS industry - operators and investors alike - owe a debt of gratitude to SaaS benchmark pioneers: Pacific Crest Securities and its successor KeyBanc.

With a special credit to David Skok of Matrix Partners for driving participation and awareness.

While there is an abundance of SaaS benchmarking reports, they quite understandably typically only cover 1 or 2-year periods.

We’ve attempted to add value by aggregating the Pacific Crest/KeyBanc 2010 to 2022 reports to create a historical, longitudinal data set.

Downloadable PDF slides of the historical SaaS benchmarks are at cloudratings.com

Summary - A Maturing High-Growth Industry

The historical SaaS benchmarks capture the maturation of the industry:

That said, a 34% average revenue growth rate is a material offset to “only” mid-single digit (MSD) CAGR metric declines.

Notable Metrics + Trends

Stable net revenue retention despite rising gross churn speaks to the evolution of customer success to a revenue-oriented function:

Expansion as a revenue contributor has dramatically grown:

Positively, this speaks to:

• SaaS applications generating positive customer ROIs to earn land and expand within orgs

• Broadening of product suites, leading to larger “expansion surface areas”

• The increased revenue-generation emphasis of customer success as a function

• Installed base math: the early era of SaaS had definitionally a small installed base to expand upon. Whereas today’s SaaS vendors have decades of installed bases to expand from →that historic-to-new ratio imbalance mathematically will favor expansion as a driver.

Negatively, this increased proportion of expansion revenue reflects:

• Challenges in winning new logos: CAC CAGR of 7%

• With field sales getting harder: CAC CAGR of 7% (vs 4% CAGR for inside sales)

These declining go-to-market metrics are reflected in an industry-wide EBITDA bridge - Sales + Marketing made up 73% of the decline:

The maturation of the SaaS industry is reflected in a deceleration of growth rates from 45% in 2010 to 28% in 2021. Combined with margin pressures, industry-wide Rule of 40 scores have declined:

We’ve included other data points throughout the historical SaaS benchmark slides, like years to various ARR thresholds ($5m ARR 2009-2021 CAGR of 3%):

This report was first published on cloudratings.com.

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