OpenView Releases Fifth Annual Financial & Operating Benchmarks Report

BOSTON, Nov. 18, 2021 /PRNewswire/ -- OpenView, a global venture capital firm that coined the term product-led growth (PLG), today released its fifth annual Financial & Operating Benchmarks Report (formerly known as Expansion SaaS Benchmarks). The report took a deeper look at successful SaaS companies – including Shopify, Slack, Datadog, and Hubspot – to compare performance across metrics that matter most in a SaaS business and identify those that propel long-term growth.

This year's report revealed surprising insights about the distribution and flows of capital within the public B2B SaaS landscape, what investors are rewarding in company performance, and the prevalence of product-led growth (PLG). According to the findings, the best-performing companies are driving outsized spending on R&D, which ties directly to PLG. In fact, PLG companies generate 1.7x more gross profit for every dollar of sales and product spent.

Other key findings from the report include:

• The flow of capital in SaaS is not equally distributed — In 2015, the median enterprise value (EV) / trailing twelve months revenue multiple for a public SaaS company was 6.0x. As of December 2020, this multiple more than tripled to 18.4x.
• Forget the Rule of 40. It's now all about the Rule of 30: 30% topline growth — This shift in thinking is informed by the massive (and growing) total addressable market (TAM) in SaaS. High-growth companies are evaluated on the basis of potential, which raises the ceiling on overall valuations; however, the growth trajectory needs to be certain for investors to generate returns. 
• Going public can be the beginning of the growth story, not the end — Large public product-led growth (PLG) companies like Atlassian and Shopify are examples of the constant expansion of what's possible: bigger markets, stronger value propositions, more profitable economic models, and more. Many initiating coverage reports expected Atlassian would grow 30% in 2018 - it is now still growing faster than that 5 years later.

"There are three simple traits we continuously see separate the "haves" from the "have nots" in the B2B SaaS landscape," said Sean Fanning, Vice President at OpenView. "It comes down to whether or not the company continues to execute against large and growing market opportunities, prioritizes business models built for rapid growth (i.e. product-led growth), and benchmarks well  against economics that support high Free Cash Flow margins over the long term. Those that combine these three traits can set themselves apart and grow at exceptionally faster rates."

Some additional key takeaways from the report include how best-in-class companies are marrying the trio of "big market, compelling growth engine, and unit economics" to tell a big story; and how culture is critical to hiring in high-growth companies. The report also covers key SaaS value drivers, progress on executive diversity, and more.  

"Today, investors are rewarding growth above all else," said Kyle Poyar, Partner at OpenView. "But growing fast is easier said than done, especially in the current hiring market. Best-in-class companies are doubling down on investments in product-led growth, usage-based pricing, and candidate experience to stand out from the crowd."

For more information, read up on the latest in OpenView's blog and download the Financial & Operating Benchmarks Report today: 

https://openviewpartners.com/2021-financial-operating-benchmarks-report 

About OpenView
Founded in 2006, OpenView is a venture capital firm investing globally in business software companies. With a mission to improve people's working lives, OpenView's focused investment approach across sector and stage enables the firm to identify and partner with category leading business software companies. The firm's focus extends to operational excellence through its dedicated expansion team working with portfolio companies on go-to-market, sales and marketing, product-led growth, talent, and corporate development. The firm is based in Boston and has $1.5 billion in total capital under management. For more information, please visit https://openviewpartners.com/.

SOURCE OpenView

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