How fast did the typical SaaS IPO grow prior to exit? We looked at the last 78 SaaS IPO’s going back to MongoDB’s IPO in October 2017. The data is below.
On median, these companies grew revenue 41% from the prior year, while the average was 50%. Median overall revenue was $198mm, however the median of the past 15 IPO’s has been higher at $249mm. A few other observations.
The fastest growers were triple digit. The fastest growers had triple digit year over year growth. Snowflake led the way with 174% YOY growth followed by Livongo at 122%. Snowflake’s growth was especially impressive since it IPO’d with $265mm in revenue (Livongo had $68mm). Livongo’s revenue was one of the lowest of the group.
For an IPO, revenue should generally be $100mm+. Only 10 companies had revenue below $100mm at the time of IPO. BackBlaze was the lowest ($54mm) and had 32% YOY growth.
Slow growth is allowed if you’re big. You can grow slowly and still go public. SurveyMonkey grew only 6%, McAfee grew only 9%, Informatica was 1%, and ON24 grew 8%. Granted, the revenue of these businesses is sufficiently large, and their revenue multiples are quite low relative to peers. Profitability could also be required.
Other revenue is small. On median, 10% of revenue was characterized as non-recurring such as services, implementation, and other non-recurring revenue. Only 27 of the companies break out other revenue however, and in all likelihood every SaaS company has some level of non-recurring revenue.
Comparison to privates. Is it fair to compare public IPO to private M&A exits? It’s not ideal, but public company data is the most transparent and honest data available. We also see similar dynamics in venture: respectable exits happen when established companies ($5mm+ of ARR) are growing 30%+ YOY.
Thank you for your readership. See more blogs and SaaS data at blossomstreetventures.com. Email the author at sammy@blossomstreetventures.com or connect on LinkedIn.
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