SaaS Company Benchmarks - Debt/Revenue Ratio

The Capchase Team
The Capchase Team
Posted on
August 31, 2022
min read
SaaS Company Benchmarks - Debt/Revenue Ratio

Understanding growth benchmarks is key for setting company goals. Companies that grow faster are typically able to better raise capital, hire, and get press. One metric that can be useful for benchmarking your company’s progress is Debt/Revenue ratio.Below, we both define Debt/Revenue ratio and explain the rates you need to be at to be in the top quartile of same-stage startups.

Debt/Revenue Ratio Defined

Before analyzing the ratio of Debt/Revenue and how your company’s Debt/Revenue ratio compares to that of other similar-stage SaaS companies, it is important to understand how it is calculated:

The debt-to-revenue ratio measures your company’s liability against revenue. It shows you how leveraged your business is: The higher your debt-to-revenue ratio, the greater your leverage.

Comparing Debt/Revenue Ratio by Company Stage

If you are looking to benchmark your company’s Debt/Revenue Ratio against that of other SaaS companies, one important trend to understand is that public SaaS companies are borrowing up to 75% of revenue, as large cash balances enable leverage.

A comparison of Debt/Revenue Ratios 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: