Two metrics we use to compare software businesses are revenue per employee and operating expense (opex) per employee. In our view these are great measures of operational efficiency. What is a reasonable amount of rev/head and opex/head in SaaS? The data from the last 73 SaaS IPOs is below (since 2017).
Headcount. The median headcount of these companies at IPO was 855 with the average coming in slightly higher at 1,343. The largest company was McAfee (6,850 employees) and the smallest was Expensify (140).
Revenue per head. Rev/head on median was $195k with a range of $19k (SentinelOne) to $629k (Expensify).
Opex per head. Opex/head on median was $171k with a range of $36k (SentinelOne) to $576k (Confluent).
The difference is small. The difference between revenue/head and opex/head is quite tight and indeed once you factor in COGS, only 20 out of the 73 generate operating income.
Sammy is the Managing Partner and Co-Founder of Blossom Street Ventures. Visit us at blossomstreetventures.com and email directly at firstname.lastname@example.org. 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.