Annual R&D SaaS Spend Metrics of 74 Publics

by

Sammy Abdullah

We track R&D spend trends of every SaaS company that has IPO’d since October 2017 (MongoDB). There have been 74 SaaS IPO’s since that time, of which 63 still trade. R&D spend trends and observations are below.

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Growing R&D spend. The median SaaS company in the data set spent $142mm on R&D in 2024, up from $134mm in 2022. This makes sense as SaaS has grown over time (revenue on median was $473mm in 2022 versus $698mm in 2024).

Profitability results in lower R&D investment. Unprofitable SaaS companies spend more on R&D than profitable ones. The median spend of the profitable SaaS co’s was $101mm in 2024 versus $163mm for the unprofitable ones. That’s a material difference and of note, unprofitable SaaS co’s had median YOYG of 22% in 2024 versus only 9% for the profitable SaaS co’s. Fast growing SaaS co’s spend more on R&D and are more likely to be unprofitable (which is more than ok for high quality SaaS).

Percent of revenue is steady. On median, SaaS co’s spent 25% of revenue on R&D in 2024; remarkably this figure has been very stable since 2022. Profitable SaaS spent only 18% of revenue on R&D and unprofitable SaaS spent 27% of revenue on R&D on median. Again, all figures held very steady since 2022, which is remarkable.

Thank you for your readership. See more blogs and SaaS data at blossomstreetventures.com. Email the author at sammy@blossomstreetventures.com or connect on LI. No AI was involved in the writing of this article.

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