The latest Pulse of SaaS report shows how changing economic factors have affected more than 500 software-as-a-service companies with annual recurring revenue of 1 million dollars to 10 million dollars.
NEW YORK, March 20, 2024 /PRNewswire/ — Capchasea revenue acceleration platform for Software as a Service (SaaS) companies, today announced its fifth Pulse of SaaS reportanalyzing 10 core SaaS company metrics to understand recent trends based on Annual Recurring Revenue (ARR).
The report found that software customers are harder to win over, slowing contract purchases and lengthening payment deadlines, reflecting increased contract scrutiny and challenges in collecting outstanding invoices. Despite these obstacles, the industry remains resilient, with different trends seen in companies of all sizes.
We highlight from the Capchase Pulse of SaaS analysis:
- Customer acquisition costs have increased: Lifetime value of contracts sold (LTV) compared to cost of acquisition (CAC) or LTV/CAC for high-growth stage companies nearly halved from 2021 to 2023, indicating that CAC increases outpaced buyers’ LTV during that period. Effective CAC spend, higher retention and effective pricing drive healthy LTV/CAC.
- The number of days of uncompleted sales (DSO) extended: The average DSO, the time it takes to pay an invoice, increased from 31 to 40 days. Companies with an ARR in between 1 million dollars and 9.9 million dollars face the longest DSO and a greater risk of revenue leakage as unpaid bills are lost or forgotten.
- Improved ARR per employee: Median ARR per employee for companies of all sizes increased by 20 thousand dollars. Reflecting efficiency-focused recruiting efforts, avoiding jump hiring and more careful talent selection, demonstrating growth and efficiency can coexist with a strategy focused on long-term success.
- Extended sales cycles: As the industry became more competitive and contract decisions subject to greater scrutiny, smaller companies saw the most significant increase in sales cycle length from 2021 to 2023 — impacting other metrics, including CAC, CAC recovery and annual contract value.
“The SaaS industry has gone through massive changes over the past two years, and our latest report shows how the industry has adapted to those changes based on hiring efficiency, product alignment, sales efficiency and overall financial health,” he said. Miguel Fernandez, co-founder and CEO of Capchase. “The fundamental factors responsible for industry strength vary greatly by company size, and these benchmarks help all companies pinpoint business operations that can be improved for better efficiency and growth.”
Highlights and other insights from the Pulse of SaaS report underscore the need for solutions to automate collections, improve sales velocity, and address efficiencies. At the same time, it shows that the industry continues to adapt to changes in the market for sustainable growth. Capchase supports high-growth SaaS companies to sustain momentum, capture unrealized revenue, and facilitate software purchases through its financing and payment products, such as Capchase Grow, Capchase collectionand Capchase payment.
To read the latest Pulse of SaaS report and learn more about Capchase’s revenue acceleration platform, visit www.capchase.com.
About Capchase
Capchase enables faster growth of B2B SaaS companies through non-dilutive capital and payment solutions. Founded in 2020 and headquartered in New York, we’ve made more than 2 billion dollars in funding available for the SaaS industry and have helped more than 5,000 companies and partners grow their revenue through our tools. We also support global financial institutions through our Lending Infrastructure product, which provides banks with universal data collection, assurance and monitoring technology to advance their financing plans. Capchase operates in 10 countries North America and Europeand is recognized as one of Fast Company’s most innovative companies and Forbes’ Next Billion Dollar Startup Companies 2023. To learn more about Capchase, visit capchase.com.
SOURCE Capchase
