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SaaS Benchmarks: Revenue Growth


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This is the first of six articles on the latest SaaS Benchmarks, providing a global view with insights from USA, Europe and UK. This article specifically focuses on revenue growth, THE single most important SaaS metric.

Before we launch into a slew of numbers and data, here are a few reasons why they are relevant to all investor funded SaaS companies: 

In 2022, there was a seismic shift in the valuation of tech companies, both public and private. Amazon stock, for example, fell a whopping 52%, marking the biggest decline since 2000 and the dot com eraMeta (Facebook’s parent company) fell 66% and Tesla was down 68%. 2022 was a brutal year for mega tech companies, and this has reverberated throughout the market. 

2023 is looking no better. As of March 2023, Amazon stock has yet to recover even 10% of its value.  And then there’s the collapse of Silicon Valley Bank and ongoing economic uncertainty around interest rates…

You will see later in this article that leaders of SaaS businesses need to deliver a 50%+ revenue growth rate to secure future funding at any reasonable valuation. Metrics which were previously ‘nice’ are now crucial indicators of smart growth, critical for funding success. 

Companies in the lowest quartile of performance are struggling to access funding, and even the top performers are only achieving flat valuations.

This article is designed to provide a solid understanding of Revenue Growth Rate expectations for companies of your size. It will answer these questions:

  • What is revenue or MRR growth?
  • How is it calculated?
  • What is the average growth rate for SaaS companies of your size? 
  • What is best in class for companies of your size?
  • Is there any difference in performance between US and European companies?
  • What steps can you take to improve revenue growth?

If you are looking for data on other SaaS benchmarks, you can see them all in our benchmark series page here: The full SaaS benchmarks series.

What is revenue growth rate?

Revenue growth is the increase in sales month on month or year on year.  It is expressed as a percentage, making benchmarks comparable across a wide variety of SaaS companies from those with low revenue per customer to those with much higher ticket sizes.

How do you calculate revenue growth rate?

The revenue growth rate is typically calculated as the percentage increase in revenue over a year. However, for SaaS or subscription businesses, the definition is more nuanced, as it only includes recurring sales. This growth rate can be calculated over any time period, but we’ll focus on an annual calculation here.
In determining the revenue growth rate for SaaS companies, only recurring sales are taken into account. One-off items or non-recurring revenue are excluded. Key SaaS metrics include Monthly Recurring Revenue (MRR) and Annual Recurring Revenue (ARR).
The formula for calculating revenue growth rate considers the change in revenue over a quarter and is multiplied by four to provide an annualized figure:
Revenue Growth Rate
Revenue Growth Rate Formula For 2023 SaaS Benchmark by ScaleXP
While the formula appears simple, the complexity lies in eliminating non-recurring revenue. Some companies use extensive spreadsheets with thousands of lines, each coded as recurring or one-off revenue. However, this approach is unnecessary, as software platforms like ScaleXP can fully automate the calculation. See it in action with a 7-day free trial.
For more mature companies and forecasts further into the future, investors sometimes discuss Revenue CAGR (Compound Annual Growth Rate) – the average growth rate over a period of multiple years.
Understanding the revenue growth rate and its nuances is essential for SaaS businesses to monitor their progress and make informed decisions. By focusing on recurring revenue and utilising software platforms to simplify calculations, SaaS companies can optimise their performance and better understand their growth trajectory.

What is the gold standard for SAAS growth?

For years, the gold standard benchmark for SaaS growth has been the Mendoza Line for Growth, developed by Scale Venture Partners, a California-based VC and early investor in Box, DocuSign, and others.

Revenue Growth Rate Mendoza Line For 2023 SaaS Benchmark by ScaleXP
The Mendoza Line for Growth is a chart that plots the anticipated revenue over the next 12 months on the horizontal axis and the growth rate on the vertical axis. Each dot represents the revenue and forward growth rates of SaaS companies in the years leading up to their IPO. The best-performing companies are at or above the Mendoza Line benchmark, shown in green.
Understanding the shape of the Mendoza Line helps comprehend performance expectations. As SaaS companies grow, their growth rate consistently declines. Consequently, it’s crucial to maximize growth early on to create the momentum and trajectory needed for sustainable results. For easy comparison, the same data can also be presented in a table.
By focusing on the revenue growth rate and the Mendoza Line for Growth, SaaS businesses can better assess their performance in comparison to industry benchmarks. Utilizing these insights, companies can make informed decisions to optimize their growth strategies and achieve sustainable results in a competitive market.

SaaS Revenue Growth: Best in Class Benchmarks

Current ARR $1M $5M $10M $20M $40M $60M $80M $100M
Mendoza Line Growth Rate 140% 94% 77% 62% 46% 36% 30% 25%
It’s important to note that the Mendoza Line for Growth was established by California VCs, such as Scale Venture Partners, in the early 2000s. As a result, this benchmark is primarily focused on companies with ambitions to go public through an IPO. In today’s post-COVID world and with specific differences in the European market, it’s worth considering the ongoing relevance of this benchmark. For more information on the Mendoza Line for Growth and its creators, you can visit Scale Venture Partners’ website at the following URL:

What are the 2022 global benchmarks?

The most credible global SaaS benchmarking study is conducted by OpenView VC. The study includes 600 companies ranging from pre-revenue to £100M ARR, spanning all regions of the world. All companies in the survey have VC funding, while bootstrapped companies are excluded.
This table presents the average revenue growth rate by company size over the last three years. The left column indicates the annual revenue for the business, while the middle number represents the average growth rate. The numbers in brackets provide a more detailed breakdown of the range in quartiles. The highest number shows the average growth rate for the top 25% of companies, and the lower number reflects the average for the slowest growth 25%.
To understand how your company’s performance compares to others in your size bracket, locate the relevant row and scan across. The variability in growth rates based on company size highlights the importance of strategic decision-making in the SaaS industry. Companies falling behind their competitors may need to reassess their strategies, while those outpacing the industry average may have an opportunity to capitalise on their success.

2022 SaaS Revenue Growth Benchmarks

Annual revenue 2019 2020 2021 2022
Less than £1M 80%
£1M - £2.5M 80%
£2.5 - £10M 50%
£10M - £20M 42%
£20M- £50M 40%
More than £50M 29%
The data above reveals that the average growth rate for SaaS companies generally increased from 2019 to 2021 for companies of all sizes, except those generating £20-£50M revenue, where growth rates declined.
While the trends in average growth from 2019 to 2021 are interesting, the most striking changes occurred in 2022. Companies in the top quartile of the less than £1M range saw a decrease in the upper threshold of growth rate %. Companies in the £1M to £2.5M range also experienced a considerable drop in growth rate %, from 45%-300% down to 37%-153%. However, companies in the £10M-20M range witnessed the largest increase, with the top quartile reaching up to 101% growth rate % compared to 20-75% in 2021.
Over the last three years, growth rates for SaaS companies of all sizes have increased , with the exception of those generating £20-£50M. The truly astounding conclusion is the growth rates of top quartile companies.  Expectations for these early stage SaaS companies have skyrocketed, with the top quartile of companies generating 300% annual growth, during covid, and maintaining 153% growth rates in more recently.  
This data is compiled by OpenView VC in the USA based on a survey of over 3000 companies.  The majority of these are based in the USA.

What about European SaaS benchmarks?

Robust SaaS benchmarking studies that focus exclusively on Europe are extremely rare. However, Serena VC does conduct a European-wide study of 250 companies, although the sample size is small with only 150 located in Europe. Despite this limitation, the study provides valuable insights into the performance of European SaaS companies. You can find the data shown here:

2022 European SaaS Revenue Growth Benchmarks

Annual revenue 2020 2021
Less than €1M 150%
€1M - €5M 90%
€5M - €10M 65%
More than €10M 60%

What can do to improve revenue growth?

The European benchmarks suggest that companies with less than €1M in annual revenue grow faster than their American counterparts. In Europe, the growth rate is 170%, whereas in the USA, it’s 100%. However, these growth rates equalize around €5M of revenue. Beyond this threshold, the growth rate of European companies slows down, and American companies begin to outpace them.

The findings for early-stage European companies (those with less than €10M in revenue) surprised researchers. This could be due to the small sample size, as only 46 companies with revenue less than €1M and 69 companies with revenue between €1-5M were included in the study.

Our first and most critical piece of advice is to look at your numbers every month.  At the very minimum, you should be monitoring revenue growth, CAC payback, net dollar retention, rule of 40 and cash burn.  This data should be automated because your time is better spent on driving growth rather than tedious calculations.

If you need to increase revenue, there are three options:
  • Faster new customer acquisition
  • Lower churn from existing customers
  • Price increases or upsells
Specific steps will depend on your business. 
At ScaleXP, we are passionate about using data to understand and improve performance.  Our platform can fully automate all of your SaaS metrics after a short 1 hour setup and onboarding.  During this session and afterwards, our produce experts are available to hop on a short zoom, review your data across a range of metrics and advice on where your performance lags behind benchmarks. 

What can I expect in 2023?

Our expectations for 2023 is that average MRR growth rates will increase across the board compared to 2022.  Funding markets are turbulent, and valuation increases are very difficult.  We expect the lowest quartile of companies to struggle to get funding.  
All SaaS Founders and CFOs must keep a careful eye on their key metrics. Which is why investment in platforms such as ScaleXP is critical for keeping a close watch on your valuation metrics.
To recap: 
Our expectations for 2023 include:
  • An increase in average MRR growth rates across the board compared to 2022.
  • Turbulent funding markets, making valuation increases challenging.
  • Struggles for the lowest quartile of companies in securing funding.
To navigate these challenges, it’s crucial for SaaS Founders and CFOs to:
  • Keep a careful eye on their key metrics.
  • Invest in platforms like ScaleXP to closely monitor valuation metrics and drive informed decision-making.


Rapid growth rates remain a key factor for successful SaaS companies, with expectations increasing during covid and remaining higher than before the pandemic. Funding markets are brutal, and we hear that ‘flat’ valuations are the new high.  
We would love your comments and thoughts. What valuation increases have you seen in 2023?  Any hints and suggestions for your fellow SaaS founders and CFOs?  Leave your comments below.

ScaleXP provides SaaS companies with a market-leading, fully automated view of all their key metrics, including those most vital to investors in 2023. By connecting with both your accounting data and your CRM platform, our solution empowers you to track benchmarks and measure performance with unparalleled ease.

If you’re ready to take your metrics tracking and benchmarking to new heights, click here to get started with ScaleXP. Enhance your company’s data-driven decision-making and stay at the forefront of the curve with ScaleXP.

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