Dear SaaStr: Can a SaaS Company Get to 50% Profit Margins?

It’s possible, though it does require a very efficient model. The biggest, most mature software leaders aren’t quite there — but they are close.

Adobe is currently at 45% non-GAAP operating margins:

Microsoft, also mature and at scale, is also at 45% operating margins:

Zoom’s non-GAAP operating margins are 40%, but it’s free cash flow margins are even higher and now exceed 50%:

Dropbox is also in the mature, low growth but higher margin phase at $2.5B in ARR, and it’s at 37% non-GAAP operating margins:

The top decile Cloud and SaaS companies have free cash flow margins of 42% today.  That’s not quite the same as profits, but maybe close enough from a founder perspective:

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