The Capchase Team
The Capchase Team
Posted on
August 31, 2022
min read

SaaS Company Benchmarks - ARR Growth YoY %

SaaS Company Benchmarks - ARR Growth YoY %

Understanding growth benchmarks is key for setting company goals. Companies that grow faster are typically able to better raise capital, hire, and get press. Below, we both define the ARR growth YoY% metric and explain the rates you need to be at to be top quartile by stage.

ARR Growth Defined

When analyzing annualized recurring revenue (ARR) or ARR growth year-on-year, it is first important to understand ARR and ARR growth is calculated:

Comparing ARR Growth YoY% by Company Stage

If you are looking to benchmark your company’s ARR growth against other SaaS companies, there are a few important trends to understand:

  • High growth, early stage companies grow faster than relatively later stage revenue companies since they’re starting from a low base
  • As total ARR increases, it’s expected to see a dip in year-on-year growth %
  • As companies grow from $5-10m, top businesses grow faster as they upsell to existing customers and increase net dollar retention
  • Up to $15mm in revenue, 100%+ YoY ARR growth (doubling every year) is required if you want to be in the top quartile globally
A comparison of ARR Growth (%) from a private analysis of over 400 SaaS companies with $1 - $15m in Annual Recurring Revenue.

Comparing ARR Growth YoY% by Geography (between EU and the U.S.)

When comparing US-based SaaS companies to their peers in the EU and UK one difference is clear. Despite the growth of the European SaaS sector over the last two years, European companies still lag behind their US peers when they grow to >$3m revenue.

Two realities impact this in particular:

  • US businesses have access to a larger initial market. This allows them to expand faster, and earlier. The European market is more fragmented, and founders need to cater to different legislative requirements and cultural norms.
  • The US benefits from a more experienced tech talent pool. In Atomico’s State of European Tech 2021 report, 21% of European tech leaders said talent is the single biggest challenge facing the sector.
A comparison of ARR Growth (%) of US SaaS companies to EU & UK SaaS companies based on data from a private analysis of over 400 SaaS companies with $1 - $15m in Annual Recurring Revenue

About Our Data & SaaS Company Benchmark Report

Whether you’re planning to raise funding or preparing your worst-case scenario, it’s more important than ever to have a razor-sharp understanding of what good performance looks like and which metrics are the markers of a healthy SaaS business. You can view the entire benchmark report, including which companies we analyzed, here.

For this report, we analyzed 439 private SaaS companies with $1 - 15m Annual Recurring Revenue. The data reflects actual financial performance, sourced directly from companies’ own records. We believe it is the largest dataset of its kind that is based on financial actuals, rather than survey data.

We then compared the performance of these private companies against 43 SaaS businesses that went public in 2020 and 2021. Data on public SaaS performance was sourced from their S-1 filings.

Or, for more analyses of important SaaS benchmarks, see our findings on: