We track sales and marketing spend trends of all SaaS companies that have gone public since October 2017, starting with MongoDB. The dataset encompasses 74 SaaS companies, of which 63 still trade. S&M spend trends and observations are below. Note the data has been updated through the latest SaaS IPO (Figma).
Unprofitable companies have much faster growth. Profitable companies grew only 9% in 2024 whereas unprofitable ones grew 22% on median. That’s a huge difference and it shows that profitability has a real cost in SaaS. As we’ll show below, there’s a stark contrast in S&M investment between profitable and unprofitable firms.
Growing S&M spend. The median SaaS company in the data set spent $253mm on S&M in 2024, up slightly from $208mm in 2022. Note however the S&M spend at profitable companies has actually declined over time ($223mm in 2022 versus $157mm in 2024). That means all the growth in S&M spend is coming from unprofitable companies ($208mm in 2022 versus $321mm in 2024).
Revenue Growth is also coming from the unprofitable. Top-line growth and S&M spend has been driven largely by unprofitable companies which are faster growing. Unprofitable companies grew at 22% on median in 2024 versus just 9% for profitable companies in 2024.
Percent of revenue varies. For profitable SaaS, the percent of revenue spent on S&M in 2024 was only 28%, down slightly from 32% in prior years. For unprofitable and faster growing SaaS companies, S&M as a percent of revenue was 45% in 2024, down slightly from 50% in 2022.
The difference between profitable and unprofitable SaaS companies is dramatic. While cash efficient growth is critical, cutting good S&M spend has repercussions.
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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