Highlights of the 2022 KeyBanc SaaS Metrics Survey

It’s one of my favorite reports of the year, and the most challenging part is choosing only the top 10 highlights, so, as usual, I’m taking it to 11.

KeyBanc Capital Markets (KBCM) is back for its 13th annual SaaS survey for Private Markets (you can download the PDF here).

This report includes responses from senior executives across SaaS companies at various stages. This is data from Private Companies — of which about 20% are less than $5M in ARR, and about 40% are less than $10M. I’ve done my best to compare results to prior years, as trends YoY are equally as important.

WORD OF CAUTION: The number of respondents has dropped off significantly this year, so statistically starting to become problematic: 110 vs. 354 last year and 424 in 2019 (the 2020 count is confusing as they had to run it twice — a COVID thing):

PRICING: Only 41% of SaaS Companies priced their offerings by seat. (You may have seen my “occasional” posts on Consumption-Based pricing from time to time in my newsletter). An interesting note is that this survey now includes varying segments beyond B2B and B2C — such as B2D (D for Developers) and API companies, which reflects the evolving tech/SaaS landscape.

VALUATIONS: This is a new metric measured starting last year. The median enterprise value of companies surveyed in the previous year was 8.4x ARR (at the time of the liquidity event), which had quite a bit of variation and a strong relationship between valuations and top-line growth. This year, shockingly to no one, valuations are down to 6.1x ARR (based on their most recent round).

SALES: The primary mode of Sales efforts remains Field Sales based. 59% for companies with more than $5 ARR and 73% for companies under $5m ARR. Inside Sales took the second largest chunk (22% and 14% respectively). But the complimentary slide to this is the distribution of method by deal size: Anything greater than $250k is all “Field Sales,” — but I assume a lot of Field Sales are currently Zoom-led.

MARKETING SPEND: Figuring out how to optimize marketing spend relative to growth rate is a crucial problem in SaaS. Unfortunately, this study doesn’t show benchmarks marketers want to hear: Results vary. While the median sales and marketing spend has dropped this year to 31% of revenue (down from 36%), to ramp ARR growth significantly, you gotta blow a lot more dough relative to revenue: the percentage of revenue recognized isn’t much more than the percentage of sales and marketing spend out.

GROWTH: The 2021 growth levels were back up to a healthier 31% as the COVID disruptions settled (2020 was 20%!). This year saw a median ARR growth of 31%, and the forecasts are always a few points more optimistic — still at the same 36% seen in 2021 and 2019 (optimism hasn't wavered). BONUS — you can see how that 31% is split by industry categories here.

CAC: This one is always nuanced. The report always breaks CAC down into ‘blended,’ ‘new,’ and ‘up-sell/expansion’ so you can see the efficacy of spend to return. The median blended CAC comes in the same as last year — $1.20 for every $1 of revenue realized. FYI it was $1.10 in 2019 and ($1.32) in 2020.

New Customer CAC is up significantly YoY at $1.78: 2021 ($1.67), 2020 ( $1.60), and 2019 ($1.34). This signals two things: 1. SaaS is increasingly competitive, and 2. CAC Payback is getting way longer. Upsell/cross-sell (see below) is still sitting in cheap at $0.61 per $1 of ARR earned (and down from $0.63 last year).

CAC PAYBACK: CAC is also a measure of cash profitability per customer — and this negative trough is long, so take a seat! New customers, on average, take two years and two months to become profitable. This highlights a deepening dependency on access to capital to fund a SaaS company's growth through these SaaS cash flow troughs.

DISCOUNTS: If like me, you are part of the great SaaS Ponzi Scheme, it may come as no surprise to you that annual+ contracts are discounted. But how much? 8% is the median annually, and 10% is on multi-year contracts.

CROSS SELL/UPSELL: This one is interesting as it is way higher than the 36% reported last year: 46% of new ARR bookings are attributable to cross-sell/up-sell activities. Larger companies use this strategy more heavily than their smaller counterparts (2x more). This is likely due to not being so reliant on a new acquisition focus as the business matures.

CHURN: Yeah — this one is a big problem, folks. The report for last year recognized a Year-on-Year trend of dollar churn decreasing back to the pre-Covid level of 12.6%, the same percentage as 2020, which is also similar to 2019 levels of 12.5%.

This year: 14%! Luckily cross-sell and upsell offset this somewhat. Note that NDR is in the middle — 109%.

ARR per FTE: Capital Efficiency is a new metric we all want to track in this new market environment and more LeanOps times. This number is $143K per FTE. What is interesting here is that in comparison to public companies, it’s double (that’s according to data from Maritech)