Did SaaS companies become more profitable in 2024? Below are profitability and operating margins in 2024 and 2023 for SaaS companies that have gone public since October 2017 (72 companies) and are still public (60 in 2024 and 62 in 2023). Observations follow:
Operating Margin Trends. In 2024, 2023, and 2022 SaaS operating margins were 9%, 15%, and 28% on median. That’s a remarkable improvement. Of note, all that improvement is coming from unprofitable companies, as profitable companies have had consistent margins of ~11% on median. It is interesting that operating margins for profitable companies have leveled out so consistently at ~11%, and their growth has slowed. It makes us wonder if 11% is a natural “cap” on operating margin for the median SaaS company.
Operating loss trends. In 2024, 2023, and 2022 SaaS operating dollar losses were -$41mm, -$62mm, and -$67mm on median. It’s also impressive given revenue grew over that period as well. Again, we’d note that the improvement is largely being driven by unprofitable companies.
Growth maintained. While all the margin improvement has come from unprofitable companies, those companies have actually managed to maintain growth, with a median of ~23% in both 2024 and 2023. That’s fantastic.
Thank you for your readership. See more blogs and SaaS data at blossomstreetventures.com. Email the author at sammy@blossomstreetventures.com.
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