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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.
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%):
Cloud Ratings True ROI Reports
Built upon investigative customer interviews, our Cloud Ratings True ROI Reports quantify and provide 3rd party validation of a software product’s business value.
Solely as a comparison, our True ROI reports are similar to Forrester’s “Total Economic Impact” ROI product: commissioned 3rd party ROI studies that software buyers value, particularly in 2023.
We will have limited capacity for additional reports:
- 11/15 to 12/31: 1 vendor opening
- Q1 2024: 3 vendor openings