![]() ![]() Spending needs to align with realistic growth forecasts, and growth from existing customers driven by customer retention, cross-sell, and upsell takes on greater significance. However, the 100 companies we analyzed had a median last 12 months (LTM) free cash flow of just 10 percent of revenue. ![]() In fact, of 100 public SaaS companies in the United States with revenues above $100 million that we analyzed in May 2021, the median revenue growth rate was just 22 percent.Īs businesses near the top of their initial S-curve, revenue growth tends to slow and free cash flow becomes more important. Despite the sector’s image as a bastion of hypergrowth, only a small share of SaaS companies sustains growth rates above 30 to 40 percent. That’s especially true for software as a service (SaaS). ![]() The purest test of a management team and its operational discipline is arguably how well it can maintain strong shareholder returns as the business matures. ![]()
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