SaaS Revenue and Opex Per Head of 79 IPOs
Two metrics we use to compare software businesses are revenue per employee and operating expense (“opex”) per employee. Note that opex includes R&D, S&M, G&A, but excludes COGS. 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 79 SaaS IPOs is below (since October 2017).
Why we use recent IPO’s. The reason we like looking at companies at the time of IPO is because: i) an IPO is an exit event that receives intense investor scrutiny so companies tend to really tighten and optimize operations; and ii) companies at IPO are closer to the Series A to Series D companies that we invest in.
Headcount. The median headcount of these companies at IPO was 907 with the average coming in slightly higher at 1405. The largest company was McAfee (6850 employees) and the smallest was Expensify (140). The past 10 IPO’s had median and averages of 1548 and 1798.
Revenue per head. Rev/head on median was $199k and the average was $308k.
Opex per head. Opex/head on median was $165k Remember our definition of opex includes R&D, S&M, and G&A, but excludes COGS.
The difference is small. The difference between revenue/head and opex/head is quite tight and indeed once you factor in COGS, only 21 out of the 79 generate operating income.
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