SaaSletter - May 2023 SaaS Demand Index

Plus Reports from G2, Sapphire Ventures, and RepVue

We’re excited to update the SaaS Demand Index with data through May 2023.

For our new readers: the Demand Index is derived from high-intent (aka “okta pricing”) Google Search volume data.

PDF slides here.

Reminder: this is a directional, free, and ever-evolving analysis → always do your own due diligence.

Moreover, the data captured here is best characterized as top-of-funnel or dark funnel → factoring in sales cycle length, do NOT use this Demand Index as a predictor of near-term financial results and/or financial guidance.

Industry-Wide Data

High-intent search volumes are up 16% year over year.

On a sequential basis versus April (a seasonally weak month), the Demand Index was up 9%.

To frame these results, Gartner’s April 2023 forecast has SaaS spending to grow +18% in 2023 and +18% in 2024

Demand by customer type continues to be highly correlated with diversified* performing best. (*i.e. not predominantly Enterprise or SMB)

Trends By Product Category

While some consensus narratives yet again hold - “Security = strong” and “E-Commerce + Marketing = weak” like past reports (April 2023, March 2023, Feb 2023, Jan 2023, Dec 2022), one new call-out:

Communications: Strong past 4 months, *perhaps* due to AI leverage for the contact center constituents

All of the category drill-downs - like this Communications example - are available in this slide PDF:

State of The Market - G2 + Sapphire + RepVue

G2 and Sapphire each released strong State of SaaS Buying reports - the most common themes were ROI, ROI, and ROI (seriously).

Relatedly, register here if you or your portfolio companies would like early access to Cloud Ratings’ True ROI product (i.e. like commissioning a Forrester Total Economic Impact report, we validate and document your product ROI):

Sapphire “2023 SaaS Buyers Outlook” - Report | My Excerpts

G2 “2023 G2 Software Buyer Behavior Report” - Report | My Excerpts

Lastly, RepVue’s May 2023 Quota Attainment Data is threaded here. TL, DR - mixed results, with some weakness in forward-looking Sales Engineering and SDR quota attainment.

Curated SaaS Content

Tom Tunguz - “How Much More Efficient Should a SaaS Startup Be When Using AI?”

Dave Kellogg - “Interpreting The Insight 2023 Sales KPI Report”

Gerry Chen from Greylock - “The New New Moats: Why Systems of Intelligence are still the next defensible business model”

Cloud Ratings Content

We released our recent episode with

CJ Gustafson

(CFO of PartsTech - a Series C vertical SaaS - and author of

Mostly metrics

):

AUDIO | VIDEO