Today we’re excited to launch our seventh annual edition of the SaaS Benchmarks Report in partnership with Paddle. This year’s report features data from more than 700 participants on a range of metrics that matter to SaaS businesses today. From monetizing AI to ARR per FTE, the 2023 SaaS Benchmarks Report uncovers the trends that will allow your business to thrive now and into the new year and beyond.

Key Takeaways
Last year’s report showed that while valuations of public companies had plummeted, SaaS companies overall were still growing fairly quickly.
Today things look quite different.
Public SaaS company valuations have ticked up (relative to growth rates), buoyed by the promise of AI along with easing inflation. At the same time, customers stopped buying software like they did in 2021, making growth far harder to come by.

Businesses large and small delayed purchases, lengthened deal timelines, and scrutinized cloud spend in a way that we haven’t seen in some time.
Overall, this year’s report found that:
1. While growth is much harder to come by in 2023, there are pockets of resilience amid the doom-and-gloom.
The so-called outliers – companies that have managed to grow despite market contraction – are concentrated among AI-native companies, vertical SaaS businesses, and those that have managed to monetize AI.

2. The North Star for many has become ARR per FTE, which reflects the productivity of your team. We’ve seen big increases in ARR per FTE year-on-year.
While layoffs might have made headlines over the past year, they did help many companies get spiraling burn rates under control. The new North Star metric has become ARR per FTE, which reflects the productivity of your team and whether adding or cutting headcount helps make for a stronger business.

3. Positioning yourself as “AI” doesn’t impact growth. But monetizing AI does.
Adding AI isn’t enough to stand out as an outlier. You have to actually monetize the AI features you do add. 77% of SaaS companies we surveyed had either launched AI features or have AI on their product roadmap in 2023. But only 15% have actually monetized AI.
Most SaaS companies are still in testing mode, either trying to figure out what AI features they should launch or whether they can charge for these new capabilities.
4. To drive productivity, companies need efficient product-led growth (PLG), expansion within the customer base, and improved operations.
Earlier this year, the data showed that companies with product-led growth characteristics were far less profitable than their SaaS peers. These businesses had outsized spend in both R&D (which makes sense given investments in product growth, UX, analytics, etc.) as well as sales & marketing. While companies may have appeared to be product-led from the outside with free trials, public pricing, and the like, the reality is that PLG efforts weren’t core to their business models.
Today we look for PLG investments to drive incremental growth as well as to efficiency by taking work that would usually be done by people and replacing it with product-based solutions. One emerging metric to assess PLG performance is product-influenced revenue: how much net-new revenue is from customers who start with a meaningful product interaction before ever talking to sales.

Regardless of market compression and slower growth, software remains mission critical as enterprises continue to pursue digital transformation. While growth has certainly slowed year over year, pockets of resilience remain. Now it’s up to every SaaS company to figure out how to become an outlier in their own right.
Findings from the 2023 SaaS Benchmarks Report can help. Access the report here.

The post [Report] 2023 SaaS Benchmarks: A New North Star, Monetizing AI & Pockets of Resilience appeared first on OpenView.

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