Q2 SaaS Metrics of 64 Publics

We track the data of every SaaS company that IPO’d in the past five years (since MongoDB in October 2017).? Those 64 companies have all now issued their Q2 2024 earnings reports.? Below we summarize key financials and metrics.? All this data as well as historical quarterly data can be seen on our website at (blossomstreetventures.com).?

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Median quarterly revenue of $176mm.? Median and average revenue in Q2 was $176mm and $247mm respectively.? Annualized, that’s $703mm and $987mm respectively.? These companies are quite large and note that revenue does include services which tends to be a small line item for most SaaS companies.? Q1 2024, Q4 2023, Q3, 2023, Q2 2023, Q1 2023, Q4 2022, Q3 2022, Q2 2022, and Q1 2022 medians were $167mm, $154mm, $154mm, $145mm, $133mm, $130mm, $118mm, $103mm, and $102mm respectively.?

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YOY growth of 17%.? Median and average YOY growth was 17% and 15% respectively.? Given the size of these SaaS businesses, that is good growth. It’s down materially from a high of 36% in Q1 2022, and continues a slow but uneven decline: Q1 2024, Q4 2023, Q3 2023, Q2 2023, Q1 2023, Q4 2022, Q3 2022, Q2 2022, and Q1 2022 medians were 19%, 20%, 18%, 20%, 21%, 27%, 29%, 30%, and 36% respectively.

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44% generate an operating profit.? 44% of the companies generate an operating profit.? The median operating loss is -$12mm and average is -$23mm.? Median and average margins are -8% and -21% respectively.? Medians in Q1 2024, Q4 2024, Q3 2023, Q2 2023, Q1 2023, Q4 2022, Q3 2022, Q2 2022, and Q1 2022 were -11%, -18%, -18%, -20%, -20%, -21%, -26%, -32% and -30% respectively.? Margins are improving while growth is slowing.? ?

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Growing efficiently.? Even though these companies generate a loss, they are adding new revenue at an efficient pace.? On median the companies are adding $0.75 of new revenue for every dollar of loss.? That means so long as net dollar retention is over 100%, the payback on median is 1.33 years.? That’s good.? So long as your payback period on new revenue is inside of 2 years and you’re retaining the client forever (100%+ NDR), your investors should be happy to see you burn cash to grow ARR.? We do not quote the average because it is subject to skew.

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Revenue to loss ratio.? The median revenue to loss ratio is 5.39x.? In other words, for every dollar of loss, the companies have $5.39 of revenue.? It’s a healthy ratio given the efficient growth, strong net dollar retention, and quick payback periods of the growth.

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50% reported their NDR.? Of the 64 SaaS companies we follow, 32 of them reported their net dollar retention in their quarterly filing.?

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Median NDR of 112%.? Median net dollar retention for those companies reporting is 112% and the average is 110%.? These are very strong retention metrics in SaaS.? If you’re anywhere near that, you’re doing very well.? It means the current customer base is a source of growth, growing 12%+ YOY even after accounting for downgrades and churn.?? Medians in Q1 2024, Q4 2023, Q3 2023, Q2 2023, Q1 2023, Q4 2022, Q3 2022, Q2 2022, and Q1 2022 were 112%, 111%, 112%, 115%, 115%, 115%, 123%, 125%, and 120% respectively.? Retention is down materially.?

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Comparison to historical data.? Below we compare Q2’s median to historical medians we have collected.? Note the drop in growth and retention over time.? Also note the improvement in margin, cash efficiency, and payback period.? Finally, while we show ‘Rule of 40’, we believe it’s a useless and antiquated rule (that’s another blog).?

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Thank you for the readership.? Visit blossomstreetventures.com for more blogs and SaaS data.? Email the author at [email protected].