SaaSletter - KeyBanc Private SaaS Survey + More

Matt Harney

Nov 1, 2022

KeyBanc 2022 Private SaaS Survey

I can't believe I've been reading these for 13 years now.

Full report PDF here.

While there are many benchmarks worth bookmarking (sales rep productivity, sales cycle by ACV, capital consumption), my call-outs focus on notable areas for today's environment:

Matt Harney @SaaSletter

🚩🚩🚩for SaaS Industry Overall: 1% gain in organic growth needed 5% decline in FCF margins All in a Goldilocks 2021

Matt Harney @SaaSletter

Another 🚩🚩🚩 for SaaS Industry Overall: Very little evidence of operating leverage with scale (granted these are all small companies where optimizing for FCF is not always right long term choice)

Matt Harney @SaaSletter

It always comes back to GTM efficiency:

It always comes back to GTM efficiency - "Rule of 40" Achievers vs Laggards:

New logo CAC - 42% lower! ($1.05 vs $1.80)
Capital consumption 31% lower

Reliance on Upsells = Unsustainable???

I was reminded of the above Tweet from @ExitMultiple along with a frustrated Splunk customer comment (via Yardstiq) regarding the realities of spend going up every year, for years.

I increasingly question if this reliance on upsells is sustainable.

Especially at a public company scale (aka $100m ARR at IPO) where *median* small/mid-cap IPOs make public investors money

Of course, the basic math:

115% NRR
25% total revenue growth, so (125% - 115% = 10%) 10% comes from new logos
This means 60% of the growth is from upsells, 40% from new logos

...and a litany of NRR data and beautiful stacked cohort graphs all say expansion is a sustainable source.

Nonetheless, it is a terminal value risk factor I am keeping an eye on.

An indicator that marginal GTM economics (and resulting steady state margins) are worse than we know?
Are TAMs/SAMs smaller than hyped?

Intriguingly, the "Rule of 40" Achievers from KeyBanc get 62% of their gross bookings from new logos (vs 51% for Rof40 laggards) - so right in-line with @ExitMultiple's "hard mode" take.