SaaS operating margins steadied Q2 2025. Every quarter we look at the operating income and margin of every SaaS company that has IPO’d since October 2017 (60 active companies). The data is below.
Margin has really improved. In Q1 2022, operating margin on median was -30%. Since then, the margin has improved trending to -8% as of Q2 2025. Note the operating margin got as good as -5% in Q4 2024, but has since been elevated.
Operating loss has also improved, generally. In Q1 2022, operating loss on median was a high of -$19.8mm. Operating loss in Q4 2024 was -$7.1mm. However Q2 saw a tick back up to a median of -$11.3mm.
Profitability. Out of the 60 companies shown, 42 of them were unprofitable. That’s 70% of the dataset, which in an improvement versus Q1 2022, when 82% were unprofitable, but a step back from Q4 2024 when 60% were unprofitable.
It seems like operating margins may be steadying out at -8% or so, but we need to see more quarters to call it a trend. We do not expect the sector to attain significant profitability on median nor should they: growth is far more valuable in SaaS than profitability, so long as that growth is cash efficient. We actually recommend to our companies to continue burning cash so long as they’re adding $0.70 of high quality 100%+ NDR for every $1 of net loss.
Thank you for the readership. Visit blossomstreetventures.com for more blogs and SaaS data. Email the author at sammy@blossomstreetventures.com or connect on LinkedIn.
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