How much (what %) of Revenue (ARR) Comes From Renewals in a SaaS Company?

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JASON LEMKIN

Of course, it varies.

But one thing that is almost always true, is you get more renwals, more upsells, and more net revenue retention from your largest customers.

Hubspot is almost all small businesses. As a best-of-breed player, it’s net revenue retention is about 95%.

Zendesk has a mix of customers at 120% at IPO.

Box has small, medium and large customers. It’s net revenue retention at IPO was about 130%.

You’ll see exceptions for companies that almost almost “automated” upsells like Slack and Twilio. Twilio was 170% at IPO. But those models are different.

More here: Public SaaS Company Disclosure Metrics for Retention and Renewal Rates

So …

If you are selling mainly to small businesses, roughly, 80% net revenue retention is good, 90% is strong, 95% is Best of Breed.

If you are selling to enterprises, 130–140% net revenue retention is very strong.

For a blended model (S, M and L), 120% is strong.

Whatever it is, measure it. Segment it. Resource it.

And drive it up.

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Published on November 11, 2016
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