Key Data Behind Expansion-Stage

SaaS Companies

DESIGNED BY DATA COURTESY OF

Expansion-stage SaaS companies have an overarching goal to grow very fast and achieve sustainable

profitability. Understanding the operating metrics behind other expansion-stage SaaS companies can help

them form an optimal economic model. With that in mind, OpenView Venture Partners recently surveyed

more than 160 senior executives and consultants at SaaS companies to create a report that is specifically

focused on some of the growth and profitability metrics that are most relevant to SaaS companies at the

expansion stage. Below are some of the report's key findings.

DOWNLOAD A FREE COPY OF THE FULL REPORT HERE: http://labs.openviewpartners.com/expansion-stage-saas-metrics/

Average Annual Revenue Growth Rate

DeviationPercentage Growth Rate

20%

40%

60%

80%

100%

< 100K 100K - 250K 250K - 500K 500K - 1M 1M - 2M 2M-5M >5M

Monthly Recurring Revenue Range ( $ )

61%

50% 52% 48% 43% 44%52%

Revenue Growth Rate

As companies mature, their growth trajectory does not necessarily decline to a lower, more predictable rate. In fact, some large companies still manage to scale rapidly while maintaining a breakneck rate of growth.

1.Does revenue growth rate depend on the company’s size?

Average Revenue Per Employee ( $M )

Deviation

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

Average Revenue Per Employee ( $M )

< 100K 100K - 250K 250K - 500K 500K - 1M 1M - 2M 2M-5M >5M

Monthly Recurring Revenue Range ( $ )

0.050.10

0.120.17

0.200.24

0.60

Companies earning between $3.5 million and $5 million of MRR appear to hit a major inflection point in terms of how efficient they are with their human resources.

Average Revenue Per EmployeeWhat’s the average annual revenue per employee?

2.

20%

40%

60%

80%

100%

< 100K 100K - 250K 250K - 500K 500K - 1M 1M - 2M 2M-5M >5M

Monthly Recurring Revenue Range ( $ )

Percentage S&M Expense

39%

29%37%

32% 38%42%

22%

Average Sales & Marketing Expenditure as a Percentage of Annual Revenue

Deviation

Sales & Marketing Spend as a Percentage of Annual Revenue

Early-stage companies have to spend a considerable portion of their revenue on sales and marketing to gain traction in most markets. At later stages, when revenue is stronger and budgets are bigger, companies have to grow their sales and marketing efforts accordingly to achieve the same kinds of results.

What percentage of annual revenue is budgeted for sales and marketing?

3.

Relationship Between Revenue Growth and Sales & Marketing Spending Levels

4.

There appears to be a minimum level of sales and marketing spending (20 percent) that is required to effectively grow an expansion-stage SaaS business.

How important is sales and marketing spending level to revenue growth?

Average Sales & Marketing Spending as a Percentage of Revenue Growth (%)

Deviation

20%

40%

60%

80%

100%

< 10 10-20 20-30 30-40 40-50 50-60 60-70 70-80 80-90 90-100 >100

Monthly Recurring Revenue Growth Rate ( % )

Percentage S&M Expense

17%24%

30% 30% 28%34%

23%

45%55%

73%

40%

Relationship Between Revenue Growth and Sales and Marketing Efficiency

5.

Average Sales & Marketing Dollars Spent per Dollar of Additional Revenue

Deviation

0.70

1.40

2.10

2.80

3.50

< 10 10-20 20-30 30-40 40-50 50-60 60-70 70-80 80-90 90-100 >100

Monthly Recurring Revenue Growth Rate ( % )

S&M Expense( $ )

1.581.20 1.23

0.890.68

0.83

0.57 0.64 0.660.76

0.42

We can see that the range of values narrows significantly for companies that are growing the fastest and spending the most efficiently, indicating that the resulting growth is generally strongly correlated to this measure of sales and marketing efficiency.

What’s the sales and marketing cost to gain one dollar of additional revenue?