While the value of any SaaS business is derived from recurring revenue (ARR), do not forsake non-recurring revenue streams. If you do, you’re ignoring free financing and a way to make the product stickier. Below is non-recurring data at the time of IPO for the last 73 SaaS companies. 27 out of the 73 broke out non-recurring streams. The list shows that some of the largest SaaS success stories derive significant revenue from non-subscriptions sources.
Of the 73 companies, on median and average, 11% and 14% of revenue is derived from non-recurring streams. Note companies like Evercommerce (31%), Qualtrics (27%), Health Catalyst (37%), Informatica (50%), and Zuora (28%) all derive a significant portion of revenue from non-recurring streams, and they all enjoy strong revenue growth and retention.
If you’re generating revenue only from subscriptions, there is revenue you’re leaving behind which can serve as free cash financing and make your product stickier.
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