YOY Revenue Growth Benchmarks for SaaS Companies


To determine revenue growth benchmarks for Series B and C SaaS companies for comparison purposes.

Early Findings

Preliminary research shows that there are varying opinions on revenue benchmarks for SaaS companies in Series B or Series C funding.
  • According to OpenView Partners the following are 2018 SaaS benchmarks for ARR, YoY growth, and number of employees:
  • SaaS companies that receive venture capital investments reach the $1 million mark in annual recurring revenue (ARR) in four years, with bootstrapped companies reaching that milestone in seven years. "The median age of companies with $1 million in ARR is 6 years."
  • Bootstrapped SaaS companies grow at 28% per year compared to SaaS companies that received angel funding, which grow at 43% per year and SaaS companies that receive venture capital funds, which grow at 50% per year.
  • SaaS companies that target a "horizontal market are growing faster than companies attacking a vertical industry: 40% growth versus 35% respectively."
  • SaaS companies that require advanced yearly billing grow faster (40%) than those that only require advanced monthly billing (36%).
  • For SaaS companies raising Series A funding, the average ARR is $1.9 million.
  • The average ARR benchmark for Series B SaaS companies is $5 million.
  • Series B SaaS companies should be seeing a 2.5-3x ARR growth YoY.
  • If a software company only grows at 20% per year, there is a 92% chance it will cease to exist in the next few years.
  • Even at a growth rate of 60% YoY, "its chance of becoming a multibillion dollar giant are no better than 50/50."
  • After reaching the $10 million ARR, the median growth rate for SaaS companies slows to slightly under 50%.
  • Growing at a CAGR of 35%, it would take an SaaS company 10 years to grow from $5 million ARR to $100 million ARR.
  • However, if an SaaS company can maintain a 75% CAGR, it would take just five years to grow from $5 million ARR to $100 million ARR.
  • The fastest growing SaaS companies generate $3.90 in revenue for every $1.00 lost to revenue churn.
  • Above average SaaS companies achieve a 5% to 7% annual revenue churn, which is the equivalent of a loss of $1.00 out of every $200.00 per month.
  • Top SaaS companies achieve a negative revenue churn rate and have a revenue retention rate of 100%.
  • Smaller, private SaaS companies with less than $10 million in revenue have a median annual churn rate of 20%.
  • The median annual churn rate for all SaaS companies is 10%.
  • SaaS companies that spend more on sales and marketing as a percentage of revenue generally grow faster than companies that spend less.

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