We can clearly see above that public tech companies are seeing similar drop-offs in NDR to private SaaS startups. The median public SaaS NDR has fallen 10% from 121% in Q221 to 111% in Q123. While it’s a bit bumpy, the median NDR for SaaS startups has fallen a similar amount - down 8% from 112% in Q221 to 104% in Q123.
Q123 data indicates that the growth slowdown is continuing - and most companies failed to meet even the conservative plans they set earlier this year. This was the fourth consecutive quarter of decrease in both top-decile and median year-over-year ARR growth, with only 22% of companies achieving their Q123 plans.
No one can tell exactly what 2023 will bring, but one thing is for certain: there is a sprint to efficiency with improving burn multiples and slowing revenue growth across the board. Comparing 2022 performance with 2023 plans shows the stark reality. The slowdown in ARR Growth we saw in 2022 will result in a slowdown in GAAP Revenue Growth in 2023. At the same time, startups have tightened their belts to become more efficient.
With the bulk of 2022 behind us, attention now turns to planning for 2023. The topic of conversation in every boardroom is the corresponding tradeoffs between growth and burn. Check out the tool that we built that helps you understand how you compare with other companies. Stay tuned as we’ll also be publishing our 2023 Whisper Numbers later this month.
Scale Studio Flash Updates analyze a representative sample of enterprise software startups to measure industry growth rates and the health of the SaaS market. The most recent updates were Q122, 2022 Whisper Numbers, Q421, Q321, and Q221. Note that for this update — due to recent market fluctuations — we spent some additional time acquiring a broader sample than in previous editions of our Flash Updates.