SaaSletter - KeyBanc Private SaaS Survey + More

Nov 01, 2022

KeyBanc 2022 Private SaaS Survey

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

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.