SaaS companies continue to burn less cash. Every quarter we look at the operating income and margin of every SaaS company that has IPO’d since October 2017 (60 active companies). The data is below and shows that operating margin and loss continue to improve.
Margin has really improved. In Q1 2022, operating margin on median was -30%. Since then, the margin has improved trending to -4% as of Q4 2024.
Operating loss has also improved. In Q1 2022, operating loss on median was a high of -$19.8mm. Operating loss in Q4 2024 was -$7.1mm, even as these companies are growing. Of course, improvements in margin have come at the cost of YOY growth, which on median was 19% in Q4 2024 versus 30% in Q1 2022.
Profitability is up. Out of the 60 companies shown, 36 of them were unprofitable. That’s 60% of the dataset, which in an improvement versus Q1 2022, when 82% were unprofitable.
We do not expect the sector to attain significant profitability on median (20%+ margin), but the efficiency at which these companies grow will continue to improve.
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