For saas companies, how fast is fast enough

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For SaaS companies, How fast is fast enough?

Transcript of For saas companies, how fast is fast enough

Page 1: For saas companies, how fast is fast enough

For SaaS companies, How fast is fast enough?

Page 2: For saas companies, how fast is fast enough

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Average annual revenue growth for the fastest growth private SaaS companies has jumped from last year’s (2014) median of 100% to this year’s (2015) 150% annual revenue growth. 

2014

100%

2015

150%

Average annual revenue growth private SaaS companies

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We compared revenue growth and operating expense for 3 sets of companies in this mid-range of revenue (between $20-$30M) 

The top 25% private firms in terms of revenue growth, the top 25% private firms in terms of operating income

Not all private software and SaaS companies are on the path to become the next unicorns; many are successfully growing in the 20-50% annual growth range.

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By comparing these different peer groups, we can see their benchmarks for revenue growth, as well as a number of other key operating benchmarks. 

The data is pretty clear that fast revenue growth is strongly correlated with sales and marketing spends.

Accelerated revenue growth is strongest for well-funded SaaS companies.

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Sales Expense 3 X for Fast Growth Companies Versus Profitable Companies

• Sales expense: 3 X the benchmark for the most profitable companies

• Sales headcount: 2X the benchmark for the most profitable companies. 

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High growth companies feeding the funnel faster

• Marketing Expense: 4 X versus the most profitable companies

• Marketing Qualified Leads (MQLs): 4 ½ times the number as the most profitable companies

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The End Justifies the Means

If you don’t have the investment and/or the market to spend like a unicorn, don’t try to match their business model metrics

Plenty of successful companies are not in the unicorn herd and not spending hugely beyond revenues

Benchmarking helps you align your expenses with targets you can achieve

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Find out more about the 2015 Software and SaaS financial and operating benchmarks at

www.opexengine.com