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Original article
2024 SaaS Benchmarks Report by High Alpha and OpenView
https://www.mostlymetrics.com/p/2024-saas-benchmarks-the-surprising
Key takeaway
- For entrepreneurs: While AI dominates headlines, traditional metrics like net revenue retention and gross margins remain the fundamental drivers of SaaS success, with companies achieving 80%+ gross margins growing 18% faster than those with lower margins.
- For investors: AI-native and vertical SaaS companies are significantly outperforming horizontal SaaS solutions, with AI-native companies showing median growth rates of 99% compared to 37% for horizontal SaaS.
Summary
The 2024 SaaS Benchmarks Report reveals a stabilizing market with mixed signals. While early-stage companies (< $1M ARR) show strong growth rebounds to 100% median year-over-year growth, later-stage companies face continued growth rate declines. The report highlights a significant shift toward AI adoption, with 56% of companies having launched or tested AI features. Despite market challenges, founder optimism remains high, with 63% feeling more optimistic about their company's future than the previous year.
Insights
- Companies with in-office cultures (3+ days/week) are growing faster (39% vs 25%) than remote teams
- Default "Rule of 40" remains consistent across all ARR bands, with a median of 22-25
- Net Revenue Retention stays in a tight range of 100-105% across most ARR bands
- Early-stage companies are increasingly utilizing fractional executive support, particularly in finance
- 76% of founders cite go-to-market execution as their primary concern, while only 10% worry about AI strategy
- Companies with higher ACVs ($25k-$50k) show the strongest growth rates
- Gross margin improvements directly correlate with growth rates
Implications
- SaaS companies need to balance AI innovation with fundamental metrics
- The hybrid/in-office work model might become more prevalent for growth-focused companies