SAN FRANCISCO, Oct. 17, 2016 /PRNewswire/ -- Pacific Crest
Securities, the technology specialists of KeyBanc Capital Markets,
today released the results of its 2016 Private SaaS Company Survey,
which show robust growth rates for private Software-as-a-Service
(SaaS) companies. The survey also measured the tradeoff between
growth and profitability faced by respondents, finding that
one-in-four meet or exceed "The Rule of 40%," a new and
increasingly popular benchmark as investor attitudes have shifted
away from "growth at any cost."
Of the more than 330 private SaaS companies surveyed, the median
GAAP revenue growth rate in 2015 was 44 percent, with 48 percent
projected in 2016. When excluding companies with less than
$2.5 million in revenue—those which
tend to grow at a faster rate due to size—the median GAAP revenue
growth rate in 2015 was 35 percent, with 36 percent projected in
2016.
In addition, one-in-four private SaaS companies of scale are
operating at or above The Rule of 40%, a much discussed key measure
of best-in-class SaaS company performance. The Rule of 40%, which
is calculated by adding a company's GAAP revenue growth rate and
profitability margin, sets an important threshold for excellence as
valuations in the sector have been more heavily scrutinized by
investors.
"Growth among SaaS companies remains strong, and many are
operating at the exceptional level investors have come to expect,"
said David Spitz, managing director,
software & security at Pacific Crest Securities, and primary
author of the survey. "Operating strategies in the SaaS space
continue to evolve, but clearly over the last year we have seen a
greater sensitivity to balancing growth objectives with the need
for developing strong unit-level economics. With our annual SaaS
Survey, we are providing invaluable tools to help management teams
and investors better understand what successful SaaS companies look
like, along with the underlying strategies and trends that are
driving their performance."
The survey further analyzed key performance data of the
companies that are operating at or above The Rule of 40%.
Respondents currently meeting or exceeding that benchmark have a
lower annual gross dollar churn compared to their counterparts (5.6
percent vs. 10.6 percent) and a lower new customer acquisition cost
(CAC) ratio ($1.06 vs. $1.33), among other findings.
Added David Skok, investor at
Matrix Partners, author of the SaaS-focused blog
forentrepreneurs.com and active supporter of the survey for the
past five years: "It's very important that SaaS companies are able
to benchmark and track core metrics. Most SaaS models require
upfront sales and marketing costs and delayed revenue collection,
leading to a cash flow trough where companies are losing money in
the early years. This survey enables SaaS companies to benchmark
core metrics to know if they're on track and whether their business
will work in the long term."
The annual SaaS Survey is used to identify the operational and
financial metrics that benchmark success among private SaaS
companies. Findings from the survey cut across virtually every
aspect of SaaS operations, from go-to-market selling strategies,
customer retention rates and customer acquisition costs, to
operational management, growth and margin structures. More than 330
senior executives from private SaaS companies around the world
participated this year. Survey results are available at
www.pacific-crest.com/2016-saas-survey/.
About the Pacific Crest Private SaaS Company Survey
The Pacific Crest Private SaaS Company Survey is one of the leading
reference materials on financial and operating benchmarks for the
SaaS sector. The annual survey was first developed in 2011 to
provide benchmark performance metrics for SaaS companies and steer
decisions for success among SaaS companies and their investors.
More than 330 senior executives from SaaS companies around the
world participated anonymously and confidentially in the 2016
survey. Responses were submitted online between June and
July 2016. Pacific Crest cannot
verify accuracy of responses. Observations and commentary contained
herein relate solely to the survey results and cannot necessarily
be applied elsewhere. Specific disclosures can be seen at
www.pacific-crest.com/disclosures and privacy policy
at www.pacific-crest.com/privacy-policy. For more
information about Pacific Crest Securities, please visit
www.pacific-crest.com.
About KeyBanc Capital Markets
KeyBanc Capital Markets
provides deep industry expertise and capital markets and advisory
solutions to companies in targeted verticals which include Consumer
& Retail, Healthcare, Industrial, Oil & Gas, Real Estate,
Utilities, Power & Renewables, Diversified Industries, and
Technology, through Pacific Crest Securities. With over 800
professionals across a national platform, the firm has more than
$27 billion of capital committed to
clients. Our award winning Equity Research team provides coverage
on more than 775 companies. KeyBanc Capital Markets is a trade
name under which corporate and investment banking products and
services of KeyCorp and its subsidiaries, KeyBanc Capital Markets
Inc., Member NYSE/FINRA/SIPC ("KBCMI"), and KeyBank National
Association ("KeyBank N.A."), are marketed. Pacific Crest
Securities is a division of KBCMI. Securities products and services
are offered by KeyBanc Capital Markets Inc. and its licensed
securities representatives, who may also be employees of KeyBank
N.A. Banking products and services are offered by KeyBank N.A.
About KeyCorp
KeyCorp's (NYSE: KEY) roots trace back 190 years to Albany, New York. Headquartered in
Cleveland, Ohio, Key is one of the
nation's largest bank-based financial services companies with
assets of approximately $101 billion
as of June 30, 2016. The acquisition
of First Niagara Financial Group, which became effective on
August 1, 2016, added assets of
approximately $40 billion, based on
June 30, 2016 balances. Key provides
deposit, lending, cash management, insurance and investment
services to individuals and small and mid-sized businesses in 15
states under the name KeyBank National Association and First
Niagara Bank, National Association, through a network of more than
1,200 branches and more than 1,500 ATMs. Key also provides a broad
range of sophisticated corporate and investment banking products,
such as merger and acquisition advice, public and private debt and
equity, syndications and derivatives to middle market companies in
selected industries throughout the United
States under the KeyBanc Capital Markets trade name. For
more information, visit www.key.com KeyBank and First Niagara
Bank, National Association are Member FDIC institutions.
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SOURCE KeyCorp; Pacific Crest Securities