Below is the quarterly ‘cash efficiency’ of SaaS companies that have IPO’d since October 2017. The definition of cash efficiency is net new revenue/operating loss over the past year, so the higher the figure, the more revenue is being added for each dollar of loss. The reciprocal of this formula is the payback period on your net loss, so for instance if you have net new revenue/operating loss of $0.50 in a year, your payback period is 2 years (no good). If it’s $0.75, your payback period is 1.5 years (good), and if it’s $1.00 your payback period is 1 year (excellent).
Note that for companies that are profitable or failing to grow, cash efficiency and payback period ratios don’t apply. The data through Q1 2026 is below.
Over the past 17 quarters, SaaS cash efficiency has improved dramatically and consistently from roughly $0.70–0.75 in 2022 to $1.52 in Q1 2026. The latest quarter’s $1.52 mark implies a payback period of 0.66 years which is outstanding.
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, has a low cost of maintenance, and most importantly is 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 is 110%, meaning that in future years the revenue from each customer actually grows over time.
Cash efficiency is one of the most important metrics measures in SaaS, and combined with net dollar retention, the two metrics are the greatest drivers of value in our view.
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.
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