Fresh Insights

Analyses, Musings & Observations

Net dollar retention data

Net dollar retention is arguably the most important measure in SaaS. Formulaically when measured over a 12 month period, it’s ARR 12 months ago + upgrades — downgrades — churn that occurred over the following 12 months, all divided by that beginning ARR. A healthy SaaS business has net dollar retention over 100% because upgrades in the customer base…
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The right level of SaaS burn

Fast growing SaaS businesses are usually unprofitable, but what is level of operating loss or burn is acceptable? We looked at the last 73 software IPOs going back to MongoDB in October 2017. The data is below and observations follow. Revenue to burn is 3.50x to 1. That’s the acceptable level of SaaS operating loss….
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Recruiting great SaaS sales talent

The Bridge Group is a SaaS sales consulting firm that we hold in very high regard. They release outstanding sales data which can be found at their site, bridgegroupinc.com. We recently reviewed their “Sales Hiring Hourglass” which is primer on hiring B2B sales talent. It’s well worth the read, and below I summarize some of…
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Q2 SaaS metrics

We keep close track of every SaaS IPO in the past five years (since MongoDB in October 2017). Those 67 companies have finally all issued their Q2 2022 earnings. Below we summarize key financials and metrics. Median quarterly revenue of $102mm. Median and average revenue of the 67 companies was $102.5mm and $171.1mm respectively. Annualized,…
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AE and SDR data and metrics

The Bridge Group is a SaaS sales consulting firm that we hold in high regard. They release outstanding sales data which can be found at their site, bridgegroupinc.com. We recently reviewed their “SaaS AE Metrics & Compensation Report” which compiles data from 287 executives at SaaS companies with median revenue of $27mm and median ACV…
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How SaaS performs in a recession

The Great Recession lasted from Q4 2007 to Q2 2009 and was severe: unemployment increased from 5% to 10% in October 2009 and American households lost an estimated $16 trillion in net worth while. A quarter of households lost at least 75% of their net worth and half lost at least 25%. We took a…
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Lessons from Blackberry’s failure

I recently read Losing the Signal by Jacquie Mcnish and Sean Silcoff.  It’s a fantastic read if you want to learn how to avoid mismanaging your market position.  Below are some of the passages we learned from.   Blackberry had no security equal.  “No other phone maker operated its own in-house network, a rapid, encrypted,…
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Data that shows SaaS does scale

Does SaaS scale? We’ve never seen anyone show the data that says it actually does. Below, we attempt to use two metrics to drive home the point that SaaS does indeed scale, getting more cash efficient as companies get bigger. The first metric we look at is historical cash efficiency. We measure cash efficiency as…
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Learnings from Snapchat’s story

I recently read How to Turn Down a Billion Dollars, The Snapchat Story by Billy Gallagher. The book is fantastic and full of lessons. It’s well worth the read, but below are some of the passages we learned from. Snapchat really started as a sexting app. “He wouldn’t have to worry about sending a hookup…
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Payback period data in SaaS

It’s ok and even desirable to be unprofitable when you’re adding revenue at an acceptable cost and you’ve got 100%+ net dollar retention, meaning you never lose the customer and actually grow them over time. In order to measure the acceptable cost of new SaaS revenue, we look at new revenue vs operating loss, and…
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