For SaaS companies, How fast is fast enough?
www.opexengine.com 2
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
www.opexengine.com 3
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.
4www.opexengine.com
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.
www.opexengine.com 5
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.
www.opexengine.com 6
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
www.opexengine.com 7
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
READ MORE
Find out more about the 2015 Software and SaaS financial and operating benchmarks at
www.opexengine.com