Presented by Sage Intacct
In a post-COVID world, data-informed business planning is vital. Join this VB Live event for a deep dive into the Key Banc Capital Markets survey for the metrics you need to know, plus insight into improving cash flow, revenue, billing, forecasting, and more.
The rules have changed with COVID-19, and so have the benchmarks for SaaS companies. This year, the Key Banc Capital Markets survey offers data that’s more important than ever for a new reality, says David Appel, Head, SaaS Vertical, at Sage Intacct.
“These metrics are the metrics investors want to know,” Appel says. “Everyone has to prepare for their board meetings; this is how to understand how you compare against your peers and what expectations your investors might have about how you’re doing.”
The primary benchmarks, ARR, churn, CAC, capital efficiency, have all been impacted significantly by the pandemic, Appel says. Churn is up, because companies, more concerned than ever about cash flow — particularly with no vaccine on the horizon — are cancelling contracts.
Top-line median 2020 growth expectations have been cut roughly in half, compared to last year’s growth and looking at initial 2020 estimates entering the year. Even the fastest growing companies are seeing a significant slowdown, with a median reduction of ARR growth from 96% in 2019 to 41% now expected for 2020.
But while the net impact is negative near-term, businesses are still showing tremendous relative growth in an otherwise incredibly difficult economic environment — and offering insight into how to weather the storm.
This survey data gives management teams the ability to anticipate the expectations their board members are going to have, and thus prepare — the data is the data, after all. Whatever your churn is, that’s your churn. Knowing where you stand allows you to be proactive about it, as well. If you’re four percent higher than the median, for example, you want to be able to say in the board meeting, “We recognize our churn is higher and this is what we’re doing about it. Everyone in the executive team is calling every one of our clients.”
You also want to be able to communicate clearly and honestly to your customers, which benchmarks allows you to do. They want to know that you’re in financially good health. You want to be able to invest in continuing to make them successful. You help people buy, you help people solve a problem, you want to be able to communicate to them that you can still help them solve their problem, because you’re on top of your metrics and where you should stand, and you’re working to ensure that you meet any challenges there.
“Most companies have a difficult time producing this information,” Appel says. “They have to work in spreadsheets and do it by hand, and it takes a long time and has a real chance of being in error.”
Surveys like the Key Banc survey are essential because they reveal patterns in how successful subscription companies build themselves up, how they sell, how they integrate the systems so that they can automate and create more flexible billing and adjust their prices in a way that allows them to understand financially where they stand.
Forecasting and planning for the future always relies on what’s happened before, how likely that is to happen in the future, and how confident you can be in scenario planning when you have specific data at hand.
“Gut calls can make a board uncomfortable,” he adds. “Data puts you in the best position to know where you stand, to be able to compare yourself in order to build the best business and best service your customer.”
For a deep dive into the survey results, and the five key insights they reveal for SaaS companies that want to do better than just weather the storm, don’t miss this VB Live event.
Don’t miss out!
You’ll learn about:
- COVID benchmarks on ARR, churn, CAC, and capital efficiency
- How to gauge relative success in terms of growth and cash flow profitability
- Comparisons across funding stages, go-to-market models, type of product and primary buyer
- Operational adjustments companies are making in the wake of the changing environment
- David Spitz, Managing Director, Key Banc Capital Markets
- David Appel, Head SaaS Vertical, Sage Intacct
- Stewart Rogers, Analyst-at-Large, VentureBeat