Net Dollar Retention Trends Q4 2023

How is net dollar retention trending in SaaS? It has stabilized. Below is the net dollar retention of every SaaS company that has IPO’d since October 2017 (62 companies still active). The data shows NDR over the past 8 quarters. 44 of them released net dollar retention data in Q4, the others did not.

Falling NDR. The current median of 111% is strong, but that figure fell from H1 2022 when NDR was over 123%. The average NDR shows similar trends.

It might looks like the trend is down, but it’s actually stable. NDR had been 115% for the 3 straight quarters from Q4 2022 to Q2 2023, indicating a stabilization. However, we’re now at 111%. While it would appear we’re getting away from stability, Q4 is an anomaly: in Q4 more companies report than in other quarters as part of their annual filing. 44 companies reported in Q4 whereas 34 reported in Q2 and Q3. Those 10 extra companies that don’t typically report are bringing the figures down. If we look at only the 34 companies that reported in Q2 and Q3, then median and average NDR in Q4 of those 34 companies is 113% and 111%.

Other good signs. In Q3 of 2022, median NDR was 123%. Then in Q4 of 2022 it fell hard to 115%. We believe this is because SaaS renewals tend to be much heavier in Q4 than other quarters, so if you’re going to have churn you’ll really see it in Q4. Importantly, we didn’t see a similar drop from Q3 2023 to Q4 2023. It’s another great sign of stability and overall SaaS trends.

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