Attributes of a great SaaS business – UserTesting

What does a successful SaaS business look like? UserTesting is a great example (NYSE: USER). The company announced on October 27th that it was being acquired by Thoma Bravo for $1.3bln (7.5x LTM revenue). We dug through USER’s latest quarterly filing and below are some of the structural and business practices that make them valuable.

What they do. Founded in 2007 in California, UserTesting enables organizations to see and hear the experiences of real people as they narrate their thoughts out loud while engaging with products, designs, apps, processes, concepts, and brands. They IPO’d in November 2021.

Revenue is 1+ years subscription, non-cancellable, paid upfront. 90% of revenue is subscription driven. The substantial majority of our subscriptions are for a one year, non-cancelable term, with some large, multi-year subscriptions ranging up to three years and some small, short-term subscriptions of less than one year. Our contracts are typically billed annually in advance and we generally recognize subscription revenue ratably over the contract term.

Pricing options flex to the customer’s needs. We offer two primary subscription pricing plans — a seat-based subscription plan and a flex-based subscription plan. Each pricing plan provides platform access to our customers for the duration of the contract. Our seat-based subscription pricing plan varies depending on the platform edition and the number and type of seats. It provides an additional pricing option to our customers. Our pricing plans are structured to further facilitate expansion within our customers’ organizations, including making it easier for our customers to add additional users and use cases. Customers utilizing the flex-based subscription pricing plan typically enter into an annual contract that covers access to the platform and the pricing is based on expected annual committed utilization of the platform’s features. Customers who exceed their contractual limits are able to purchase either additional committed usage or on demand usage. The pricing plan and related utilization is determined based on the activity the customer processes within the platform, including the number and type of Customer Experience Narratives (CxNs) generated, and type of audience targeting used.

Direct sales dominate; channel sales are near zero. We primarily sell through a direct selling motion, with field sales representatives who focus on enterprise customers and an inside sales organization which sells to mid-market and small and medium-sized business customers.

International sales are key to growth. Approximately 21% of our total revenue came from customers outside the United States. International revenue for the three and nine months ended September 30, 2022 increased 47%, respectively, compared to the prior year period.

Financials. Our total revenue for the three months ended September 30, 2022 and 2021 was $49.4 million and $38.6 million, respectively, representing period-over-period growth of 28%. Our net loss was $15.2 million and $9.6 million for the three months ended September 30, 2022 and 2021. The company has 2580 customers, of which 404 customers have contract values representing at least $100k of ARR. Net dollar retention is strong at 107%. MRR to operating loss is a reasonable 3.3x.

Sammy is the Managing Partner and Co-Founder of Blossom Street Ventures. Visit us at and email directly at We invest in companies with run rate revenue of $3mm to $30mm, with year over year growth of 20% to 100%+ depending on revenue. We lead or follow in growth rounds and special situations like inside rounds, small rounds, rushed rounds, corralling investors with our term sheet, cap table clean up, and extensions. We can commit in 3 weeks and our check is $1mm to $4mm. Also visit for always up-to-date SaaS metrics.