One time revenue matters in SaaS

Recurring revenue is far more valuable than one-time revenue to investors and acquirers. But don’t forsake one-time revenue. Some of the best SaaS businesses in the world generate a lot of services/one-time revenue as it’s a valuable source of cash and makes the product stickier. The list below shows the last 74 SaaS companies that went public on median generated 11% of their revenue from non-SaaS sources and 14% on average. It’s material.

A few things to know:

It’s a Source of Cash. The most obvious reason one-time revenue is valuable is that it’s a source of cash to fund overhead. While a VC or acquirer may not ascribe a multiple to that revenue stream, they’ll look at it as “financing” for the core business. While the business is still burning money, one-time revenue is as important as recurring revenue as a source of cash.

It Can Make You Sticky. The customer wants customer service, especially when ACV is $24k+. It’s about not just being a product, but a solution which encompasses a significant level of touch with the client. Companies that touch their clients often with support, consulting, services, repeat onboarding, customer success initiatives, ideas on new use cases, etc tend to have way less churn.

Even though it’s not as attractive as recurring revenue, don’t forsake onetime revenue. For the reasons above, it can be every bit as important as recurring revenue.

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