2024 SaaS Benchmarks: The Surprising State of SaaS

Key takeaways from the 2024 SaaS Benchmarks Report

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Alright, folks, it's that time of year again. The leaves are falling, the pumpkin spice is flowing (don’t you dare bring that shit in my house), and the 2024 SaaS Benchmarks Report just dropped (Source: HighAlpha). Grab your coffee (or your favorite adult beverage), because we're about to dive into some insights that might just change how you think about the SaaS landscape.

1. The Return of the SaaS Buyer

Remember when everyone was tightening their belts and "doing more with less" was the mantra du jour? Well, it looks like the pendulum is swinging back. SaaS spend rebounded by 9% across all company sizes in 2024 .

But here's the kicker: companies with fewer than 500 employees led the charge with a whopping 59% increase. It seems like the little guys are realizing that sometimes you need to spend money to make (or save) money. They're leveraging tech to boost efficiency instead of hiring more humans. And it appears they’re buying tech (toys?) to keep those employees they do have onboard happy.

Software companies buying software?

We are so back.

For the seventh time this year, I am manifesting this with the raw power of delusion.

2. The "Great" Expectations Gap

Here's a mind-bender for you: if you're a SaaS company with over $50M in Annual Recurring Revenue (ARR), you only need to grow at 25% year-over-year to be considered "great". I'll give you a moment to pick your jaw up off the floor.

Yes, you read that right. While we've all been chasing those unicorn-level growth rates of 2021 and 2022, it turns out the bar for "great" at scale is now much lower than you may think.

Honestly, I kinda feel like I was lied to.

Here's how it breaks down for the $50M+ ARR club:

• "Good" (median) year-over-year growth rate: 15%

• "Great" (upper quartile) year-over-year growth rate: 25%

So, if you're growing at 25% or more at this scale, congratulations! You're outperforming 75% of your peers.

3. Vertical SaaS is Having Its Moment

Vertical SaaS companies are outperforming their horizontal peers across the board.

Let's break it down:

• At the median:

  • Vertical SaaS: 45% growth

  • Horizontal SaaS: 28% growth

• In the top quartile:

  • Vertical SaaS: 100% growth

  • Horizontal SaaS: 56% growth

From talking to fellow vertical SaaS operators in my network, investors took notice in 2024. Why? Because when you go deep into a specific industry, you can build stickier products, command higher prices, and fend off the one-size-fits-all competition.

(Check out our recent S1 breakdown on ServiceTitan, a vertical SaaS leader)

Speaking of going vertical… As a kid, I couldn't sleep for a week after watching the opening scene of Vertical Limit—the part where the guy cuts his own rope to save the other person haunted me for years.

4. Go Big or Go Home (but bring your check book)

A GTM paradox for the ages: bigger deals are riskier and more expensive to land, but they also result in better growth rates and net dollar retention (NDR). It's the SaaS equivalent of "no risk it, no biscuit."

Check out these numbers for companies with Annual Contract Values (ACVs) between $100k-$250k:

• Growth rate: 45%

• Net Revenue Retention: 113%

Compare that to the poor souls dealing with ACVs in the $5k to $10k range:

• Growth rate: 34%

• Net Revenue Retention: 100%

The lesson? If you can stomach the risk and front-load the investment, going after those big fish can pay off in spades.

Johnny Tsunami might have come out 25 years ago, but I still live my life by its motto.

The Bottom Line

So, what does all this mean for you? A few things:

1. Embrace the SaaS Spending Rebound
   Don't be afraid to invest in SaaS: The market is bouncing back, with SaaS spend up 9% across all company sizes in 2024 . Smart companies, especially those with fewer than 500 employees (who increased spend by 59%), are leveraging tech to drive efficiency rather than hiring. If you arne’t going to hire a ton more people, give the ones you have the tools to succeed. Plus, Christmas is approaching, and who doesn’t want a Miro license?

2. Redefine "Great" Growth
   If you're at scale ($50M+ ARR), breathe easy: 25% year-over-year growth puts you in the "great" category . The days of chasing unsustainable triple-digit growth are over. Don’t be so hard on yourself, and over rotate to spend your way into 50% growth if it’s not there.

3. Consider the Vertical Leap
   Vertical SaaS is having its moment, outperforming horizontal peers. If you're struggling to find product-market fit with a horizontal solution, it might be time to niche down and go deep (and admit trying to go against Salesforce to reinvent the “one size fits all” CRM wasn’t a great idea.)

4. Think Big on Deals, But Be Strategic
   Yes, they're riskier and more expensive to land, but the payoff in growth and retention can be substantial. Develop a strategy to move upmarket. If you don’t start today, you’ll be stuck slinging $7K ACV deals with 27% full loaded commission rates for the rest of your life.

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Run the Numbers

Apple | Spotify | YouTube

I interviewed the CFO of Miro, Justin Coulombe. We discussed:

• The power of strategic divestments

• Miro’s approach to blending data from usage patterns, predictive modeling, and AI to identify upsell opportunities, prevent churn, and enhance customer retention.

• How to build a high performing team that’s comfortable with making mistakes

• Taking on business transformations at Autodesk, Box, SurveyMonkey, and now Miro