We track every SaaS company that has gone public since Q4 2017. The 44 that remain publicly traded and are not distressed have released their Q2 2026 earnings, and sure enough SaaS had its best quarter ever, driven by AI. Below is a summary of the key financials and metrics. You can find this data, along with historical quarterly figures, on our website at blossomstreetventures.com.
Median quarterly revenue of $301mm. Median and average revenue were $301mm and $505mm, respectively, implying annualized revenue of $1.2bln and $2.0bn. These are large businesses. Revenue figures include services, which are typically a small portion of total revenue for SaaS companies (usually 10% at most).
One important data note: the median revenue has jumped meaningfully versus history. This is driven by smaller companies exiting the public markets and much larger companies such as Waystar, ServiceTitan, and SailPoint going public. For instance the median was only ~$102mm in Q1 2022.
YOY growth of 18%. Median and average year-over-year revenue growth were 18% and 20% respectively. This is well below the 36% peak in Q1 2022 and lower than most of 2024. That said, growth has been stable or even climbing for 6 consecutive quarters.
55% generate an operating profit. Median operating loss was -$4.0mm, while the average was — $3.0mm. Median and average operating margins were -4% and -7%, respectively. Median operating margins have improved materially over time, moving from roughly -30% in early 2022 to mid-single-digit losses today. The software industry has permanently reset its relationship between growth and profitability since 2022, trading the former for the latter.
Growing efficiently. Even where companies are losing money, they are doing so efficiently. On a median basis, companies generate $1.67 of incremental revenue for every $1 of operating loss.
With net dollar retention above 100%, the median payback period is just 0.60 years, which is excellent. If a company can keep payback under 1.5 years and retain customers long term (100%+ NDR), investors are generally comfortable funding losses to grow ARR.
Revenue to loss ratio. The median revenue-to-loss ratio is 12.4x. Put differently, for every dollar of operating loss, companies generate $12+ of revenue. Given strong retention, fast paybacks, and efficient growth, this is a healthy profile.
Median NDR of 110%. 55% of companies reported net dollar retention in the quarter. Median and average NDR were both 110%, which remains strong by SaaS standards. At this level, the existing customer base continues to be a source of growth even after churn and downgrades.
That said, retention is down materially from 2022 highs and appears to have broken the 2024 trend. Median NDR has declined from 120–125% levels in 2022 to the high-100s today. But, similar to the growth trend, the past few quarters have shown real stability.
Comparison to historical data. Below we this quarter’s median to historical medians we have collected. Note the drop in growth and retention over time, but the recent stability of both metrics. Also note the improvement in margin, cash efficiency, and payback period. The revenue profile (growth and retention) is stabilizing while the financial profile is improving. Finally, while we show ‘Rule of 40’, we believe it’s a useless and antiquated rule (that’s another blog).
How good was the quarter for SaaS? It was amazing. Nearly every company that has reported has beat or raised guidance, is enjoying improved growth and margin profiles, or some combination of the aforementioned. For example: Palantir’s revenue grew 93% year-over-year and 19% sequentially to $1.935 billion. Zeta had its 20th consecutive beat-and-raise quarter. Freshworks beat the high end of guidance with 16% year-over-year growth. Klaviyo beat revenue expectations, raised guidance, and signed it’s largest deal ever. Atlassian’s adjusted EPS was $1.87 against a consensus of $1.50, a 24.67% beat, on revenue of $1.77 billion growing 28% year-over-year. Dynatrace exceeded the high end of every single guided metric simultaneously while delivering the fourth consecutive quarter of organic net new ARR acceleration. Datadog had its best growth quarter in four years; revenue was $1.12 billion, up 36% year-over-year. Cloudflare’s revenue was $696.1 million, up 36% year-over-year. Large customers reached 4,698, up 27% year-over-year, with 986 net additions, a record by a wide margin and the most ever added in any 12-month period. ServiceNow beat guidance on nearly every metric and raised full-year subscription revenue guidance raised to $15.755-$15.770 billion, implying 21% constant currency growth. Jfrog’s revenue was $163.8 million, up 29% year-over-year, beating the top end of guidance. When OpenAI had a sandbox breach, they contacted JFrog immediately. JFrog remediated fast, confirmed the fix, and maintained transparency throughout. Twilio set records in all metrics and raised guidance. Shopify had its fifth consecutive quarter of GMV growth above 30%. FIVN’s revenue beat the high end of guidance and their full-year AI growth outlook was raised from more than 40% to at least 60%. Procore revenue was $375 million, up 15.8% year-over-year, beating the high end of guidance by 2.5%, while achieving profitability and raising guidance. Paylocity’s revenue accelerated for the second consecutive quarter to ~12% while EBITDA margin expanded to 37%. Doximity’s revenue and EBITDA beat the high end of guidance. Salesforce’s Q2 was the most commercially spectacular in the company’s history. Crowdstrike’s call was also historic: every single guided metric set an all-time record simultaneously. SentinelOne’s revenue was $292 million, up 21% year-over-year, beating the high end of guidance. Adjusted EPS of $0.08 doubled year-over-year, beating estimates. Workday’s subscription revenue was $2.471 billion, up 14% — ahead of guidance. Non-GAAP operating margin was 31.1%, beating guidance. Okta had a record quarter and revenue of $805 million grew 11% year-over-year, beating the $793 million consensus. MongoDB recorded it’s highest revenue growth since 2024 (30% YOY) while operating margin hit 24%, up from 15% a year ago. C3’s revenue of $52.4 million beat guidance. Adjusted EPS loss of $0.20 beat the $0.25 estimate by 20%. Snowflake’s product revenue of $1.49 billion grew 37% year-over-year, the third consecutive quarter of acceleration, and EPS beat guidance. Full-year product revenue guidance was raised. Zscaler reported revenue of $898 million grew 25% year-over-year, beating the high end of guidance. At Asana, revenue of $216.4 million grew 10% year-over-year, the strongest pace in recent quarters, beating the high end of guidance. Docusign revenue grew 9% year-over-year, beating consensus by $8.5 million. Non-GAAP operating margin of 31.6% expanded 180 basis points. They also inked the largest US public sector deal in company history, and the largest LatAm deal in company history. UI Path’s revenue of $410.3 million grew 13% year-over-year, beating the $397.8 million consensus by $12.5 million. Cloud ARR of approximately $1.3 billion grew more than 19%. Dollar-based net retention improved to 109%, up 2 points year-to-date. $1 million-plus ARR customers grew 21% to 387. Rubrik’s revenue of $427.3 million grew 38% year-over-year, beating the $396.3 million consensus by $31 million, a 7.82% beat. Samsara’s revenue beat consensus, and they had quarterly records in both $100K+ and $1M+ customer additions. Veeva’s revenue and earnings beat consensus, and full-year revenue guidance was raised to $3.682-$3.687 billion. Netskope’s revenue grew 29% to $221 million, beating the $215 million guidance midpoint. NRR increased to 114%. GRR hit an all-time high. Braze’s revenue of $227.2 million grew 26% year-over-year and 8% sequentially, beating consensus. Non-GAAP operating margin reached 9.7%, up from 3.4% a year ago. Sailpoint’s total ARR of $1.231 billion grew 25% year-over-year, exceeding the guidance midpoint by $11 million. SaaS ARR grew 36% to $847 million. Lowly PagerDuty beat revenue guidance and improved retention. Gitlab delivered its largest gross bookings quarter in history, net ARR growth of 42% (second highest in four years). Alkami’s revenue of $129.8 million grew 15.9% year-over-year, beating expectations.
Thank you for your readership. See more blogs and SaaS data at blossomstreetventures.com. Other resources we’ve built for founders include: SoftwareMultiples.com; softwareMRRcalculator.com; FounderInvited.com, and TwoFoundersTalk.com. Founders are always welcome to reach out to sammy@blossomstreetventures.com as well.