Thomvest 2024 SaaS Benchmarks
Slower Growth, Steadier Margins, Slimmer Retention
Key Findings
Comparing our 2022 and 2024 SaaS benchmarks, we saw a return to normalcy as growth rates halved, gross margins increased (marginally), and net dollar retention decreased by 10%. Recent highflyers have fallen from the exosphere, and the Rule of 40 has come into focus once again. Investors and operators alike may find it timely to reevaluate their benchmarks for success.
Introduction
In 2022, we collected benchmarks from multiple sources to construct a set of trimmed-mean “meta” SaaS benchmarks. The original two-part series can be found here, which included detailed guidance on how we calculated our benchmarks and recommended ways to operationalize the metrics.
We recently updated our benchmarks using the latest benchmarks published online.
Our goal remained the same: provide a clear, relevant, and easy-to-use benchmark to help operators and investors overcome the challenge of comparing across benchmarks.
As before, the source benchmarks differed by company selection, data collection, and time period—rendering mean comparison imperfect and statistical rigor — clears throat — dubious. As with any SaaS benchmark, we recommend interpreting these metrics as directionally correct.
Onward!
Comparison 2022 vs 2024
Median ARR growth declined by 50% across revenue bands. Facing fundraising headwinds, early stage startups may have traded growth for gross margins. As before, growth rates continued to decline by revenue band.
The growth trajectories of the highest flyers declined. 2022 median quartile performance was 2024 top quartile performance. Top performers could still generate 2x growth relative to median peers.
In our 2022 and 2024 benchmarks, gross margins improved from the $10–20M ARR band to the $20M+ ARR band. Perhaps this bump can be explained by companies cleaning up house ahead of an acquisition or IPO.
Net dollar retention took a 10% hit across revenue bands. Yikes. Are customers growing at a different rate? Reducing seats? Negotiating discounts? Regardless of the reasons, declining net dollar retention will likely have a ripple effect on growth and profitability.
In their 2022 report, Capchase noted the prevalence of top-performing companies achieving ARR Growth + Net Margin in excess of 80%, dubbing this performance the “Rule of 80.” While this term became mainstream in 2022 (searches for “Rule of 80” were uncommon before this period), performance appeared to return to normal levels. For example, early-stage top performers achieve ARR Growth + Net Margin of 55%. Notably, the Rule of 40 for the 20M+ revenue band remained at 28% in our 2022 and 2024 benchmarks.
In conclusion, we hope our refreshed benchmarks help shine a light on top performance in private SaaS companies.
Sources
You can access the underlying reports through these links.
SaaS Capital — 2023 Growth Benchmarks for Private SaaS Companies: 12th annual survey based on data collected from 1500 private B2B SaaS companies in Q1 of 2023.
OpenView — 2023 Openview SaaS Benchmarks Report: 7th annual survey of 710 operators at B2B SaaS companies.
KeyBanc / Sapphire Ventures — 2023 KBCM Technology Group Private Company SaaS Survey: 14th annual survey of 150 SaaS companies in June of 2023.
Capchase — 2023 Capchase SaaS Benchmark Report: Based on financial data from 900 SaaS companies with ARR between $1M to $15M combined in June 2023.
BenchmarkIt — 2023 BenchmarkIt B2B SaaS Metrics Benchmarks Report: Data collected from March to May 2023 from 1880 B2B SaaS companies.
ChartMogul — 2023 ChartMogul SaaS Benchmarks Report: 2nd edition of ChartMogul’s SaaS Benchmarks Report. Analyzed 2100 SaaS businesses based on data collected through Q1 2023.
About the Author
Alex is an investor at Thomvest Ventures, where he focuses on real estate and financial technology.
LinkedIn: https://www.linkedin.com/in/alex-rohrbach/
Contact: alex@thomvest.com
