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Year-old companies are turning down billion-dollar buyouts in the hopes of multibillions in a few months. But we have seen similar industry phases before, and they have often ended with growth and valuations fizzling out. The industry’s booms and busts make growth, an essential ingredient in value creation, difficult to understand. To date, little empirical work has been done on the importance of revenue growth for software and Internet-services companies or how to find new sources of growth when old ones run out.

Mckinsey

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Japanese company Hitachi accounted for three percent of the world’s market for diagnostic imaging in 2017.

SAAS companies with >$250K median ACV book nearly 25% of their contracts at 3 years or longer

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Negative Churn and Expansion Revenue

If the numerator of your quick ratio is growing that means your revenue is growing. It’s important to keep increasing revenue to counter any MRR (Monthly Recurring Revenue) that is lost to churn

Since churn is so important, wouldn’t it be useful if we could predict in advance which customers were most likely to churn?

After $10M in ARR, the median growth rate slows to just under 50%

Median annual gross dollar churn was 8%, 7%, 6% and 8% in 2016, 2015, 2014 and 2013

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

More Growth Strategy Stats

Growing faster has twice as much impact on share price as improving margins

In 2018, the U.S. imported aerospace products worth about 53.98 billion U.S. dollars.

Because of the losses in the early days, which get bigger the more successful the company is at acquiring customers, it is much harder for management and investors to figure out whether a SaaS business is financially viable.

Revenue per employee has been steadily increasing in SAAS companies. It serves as a great longitudinal measuring stick to understand the increasing or decreasing efficiency of the business

Analysed by contract value, field sales are primarily evident for companies with median deals over $25K. Inside sales strategies are most popular for companies with $1K-$25K median deal sizes

While field sales remains the most popular way to sell for companies >$2.5MM revenue, companies with <$2.5MM revenue tended to use inside sales as their primary mode of distribution

The fastest growing SaaS companies scale their organizations rapidly, growing their teams by an average of 56% each year

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

Net-revenue churn improves with larger Average Contract Value (ACV), likely due to more structural churn among SMB customers and higher switching costs associated with larger contracts

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