Why is it ok to generate less than $1 of revenue for each dollar of operating loss? The reason is SaaS revenue is typically very high quality, paid up front, contracted for at least 1 year, and most importantly recurring. The recurrence means once you’ve got the customer, you do not lose them and they become an annuity. The median net dollar retention of these companies was 115% in Q4, meaning that in future years the revenue from each customer actually grows over time. The high quality of this revenue stream is why SaaS trades at a premium to other industries.
Sammy is the Managing Partner and Co-Founder of Blossom Street Ventures. Visit us at blossomstreetventures.com and email directly at firstname.lastname@example.org://blossomstreetventures.com/metrics/