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Companies with earnings before interest, taxes, and amortization (EBITA) margins below 10 percent and growth rates below 20 percent have seen their market capitalization grow 14 percentage points more slowly than the market average. The data suggest that they can drive nearly twice as much value by pushing growth rates over 20 percent as they can by pushing EBITA margins above 10 percent. Companies with EBITA already in excess of 10 percent but top-line growth below 20 percent achieve a similar market-capitalization improvement by boosting their top-line growth above 20 percent.

There is, however, one notable exception to the idea that growth is all-important. When companies reach $4 billion in revenues or more margins become more important to value multiples.

Mckinsey

More SaaS + Software Stats

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In contrast to these, the median annual churn rate for smaller, private SaaS companies with less than $10M in revenue is 20%

Companies that spend more on sales and marketing (as a % of revenue) generally grew at a faster rate than those that spent less

More than 1/2 of SAAS companies increased their spending on customer retention last year

Negative Churn and Expansion Revenue

Our experiences with SaaS startups indicate that they usually start with a couple of lead generation programs such as Pay Per Click Google Ad-words, radio ads, etc

It’s 4x cheaper to upsell existing customers than acquire new customers: costing just $0.28 to acquire an additional dollar of revenue

More than two thirds of SAAS companies experienced annual churn rates of 5% or higher

Customer Acquisition Cost (CAC) = sum of all sales & marketing expenses/ number of new customers added

55% of SaaS companies rate Customer Retention as the key metric to measure

More Growth Strategy Stats

SaaS businesses face significant losses in the early years (and often an associated cash flow problem)

Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts

56% treat “Existing Customer Renewals” as high priority

It’s 4x cheaper to upsell existing customers than acquire new customers: costing just $0.28 to acquire an additional dollar of revenue

Even if a software company is growing at 60% annually, its chances of becoming a multibillion-dollar giant are no better than 50/50

A 1% increase in pricing strategy yields an average 11% increase in profit

The fastest growing SaaS companies raise an average of $9.5M in Series A funding

If you are charging $500 per month, you can afford to spend up to 12x that amount (i.e. $6,000) on acquiring a new customer

In 2018, the revenue of General Dynamics amounted to nearly 36.2 billion U.S. dollars.

Women in western countries use the internet 17 percent more than their male counterparts