Quarterly SaaS Retention Data

How is net dollar retention trending in SaaS? We looked at the net dollar retention of every SaaS company that has IPO’d since October 2017 (64 companies). The data is below and shows a current median of 115% which is very strong, but that figure fell hard from the last 3 quarters when NDR was over 120%.

Aside from the slow down in the economy, there are other reasons for the drop: i) renewal cycles are largely seasonal. The number of renewals that come up in Q4 for most SaaS businesses is higher than other quarters. Churn can therefore increase in Q4 if you’re in an economic slowdown; and ii) the number of companies that report NDR in Q4 as part of their annual report is higher than other quarters where less data is usually provided. 46 out of the 64 companies reported NDR in Q4 whereas from Q1 to Q3, only ~34 companies reported. If we remove those companies that only reported in Q4, net dollar retention climbs to 119% and 118% on median and average. That’s better, but still a drop.

Sammy is the Managing Partner and Co-Founder of Blossom Street Ventures. Visit us at blossomstreetventures.com and email directly at sammy@blossomstreetventures.com. We invest in companies with run rate revenue of $3mm to $30mm, with year over year growth of 20% to 100%+ depending on revenue. We lead or follow in growth rounds and special situations like inside rounds, small rounds, rushed rounds, corralling investors with our term sheet, cap table clean up, and extensions. We can commit in 3 weeks and our check is $1mm to $4mm. Also visit https://blossomstreetventures.com/metrics/ for always up-to-date SaaS metrics.