SaaS Benchmarks for Companies Under $10 Million SaaS...to build out infrastructure, customer...

2014

OPEXEngine

www.opexengine.com

Waltham, MA

(617) 674-4218

Copyright © 2014 All rights reserved. No part

of this report may be reproduced in whole or

part without written permission of OPEXEngine.

SaaS Benchmarks for Companies

Under $10 Million

2014 OPEXEngine. All rights reserved. No part of this report may be reproduced without written permission of OPEXEngine, LLC.

2014 Software and SaaS Benchmarking Industry Report

Introduction Letter of Introduction

June 25, 2014

Dear Colleague,

For the past eight years, OPEXEngine has conducted its annual benchmarking study of the small and mid-sized

software industry. Hundreds of software companies have participated, and OPEXEngine’s benchmarking includes

both public and private software companies, primarily located in the U.S. with 2013 revenues between $1M and

$300M. Participating software vendors input their confidential data into our secure, web-based system, reflecting a

broad set of measures that detail their businesses. About two-thirds of the participating companies have

participated before in our software benchmarking and the rest were new companies this year. Over the past eight

years of benchmarking the software and SaaS industries, approximately 57% of OPEXEngine’s benchmarking

participants have IPO’ed or been acquired, or both.

In 2014, as we have for the past four years, we are partnering with the Software & Information Industry

Association and its software advisory board to bring a broader range of companies into the benchmarking. The

SIIA is the principal U.S. trade association for the software and digital content industry. OPEXEngine’s

benchmarking survey has been developed and refined each year through extensive consultation with a group of

leading software CEOs and CFOs as well as with the SIIA’s software advisory board.

The comprehensive benchmarks provide context for executives to manage their businesses more efficiently. We

sort the benchmarks into an extensive range of peer groups to provide a better window into different operating

models. The survey participants are divided into peer groups based on revenue size to observe different business

models by stage of growth, as well as by the number of employees. We look at the benchmark differences

between public and private software companies. In addition, we look at SaaS companies in a separate grouping

and include SaaS-specific metrics around expenses, hosting operations and customer benchmarks.

We provide several peer group categories to show how companies are structured for sales with large and small

average deal sizes. We also have a set of benchmarks for companies expecting fast growth, moderate growth and

slow growth, in order to see how growth expectations affect spending and business ratios. We provide analysis

on several year-over-year trends to help companies understand revenue and growth models over time as well.

We believe it is important to compare your company to peer groups made up of companies at a similar stage of

growth with similar business models. Often in the software industry, vendors compare themselves to their closest

competitors in the marketplace, companies that may be much larger or smaller in size or operating with a very

different business model but selling the same type of product. We recommend looking at a variety of peer groups

reflecting similar stages of growth, sales model and software delivery model to see where a more efficient use of

resources affects performance or where similar companies are achieving better performance with the same model.

In addition, it is extremely useful to analyze similar sales and marketing models, as that is typically the biggest

expense driver of a software company and represents the biggest investment risk.

We have observed in our benchmarking practice over the years that successful software companies are metrics-

driven and use benchmarking as a key management process and information tool. Benchmarking helps leadership

companies evaluate their performance against peers, as well as set internal targets and performance expectations.

Benchmarking also helps companies understand the latest changes in software business models and track to the

most successful companies. Further, companies use benchmarking to assess their positioning vis-à-vis mergers

and acquisitions, or in determining their growth path to or in the public markets.



Many of the benchmarking participants use the data frequently throughout the year to build consensus among the

executive team and boards of directors as to appropriate company targets. The benchmarks provide context to

make these critical planning decisions for every department of the company. By looking at detailed benchmarking

data for peers and leadership companies, client users choose appropriate targets for their own company and

pinpoint areas where they want to improve performance. By making these decisions based on data, instead of by

executive wrangling and anecdotes, companies find the decision making process to be quicker, with much less

friction.

Our intent is for these benchmarks to help you prepare your operational roadmap for the upcoming year and

strategic planning going forward. The metrics provide important context for the budget planning process and

business decision-making. Further, we hope that you will make benchmarking a part of your regular operating

process by tracking the benchmarks, incorporating them into regular operating reviews and sharing regularly with

all members of the executive team.

We believe that you will have a greater chance of successfully improving your performance in today’s fast moving,

dynamic software environment by using these benchmarks.

Please feel free to contact me directly at any time if we can help you better understand or interpret this report.

We are also always interested in feedback and comments on the benchmarking to improve it.

Sincerely,

Lauren Kelley

CEO and Founder, OPEXEngine

[email protected]

www.opexengine.com;

http://www.opexengine.com/



REPORT FORMAT

This report includes the following key sections:

The Executive Overview analyzes broad trends in the mid-sized software industry overall as well as trends that

are specifically taking place for SaaS companies. The overview includes textual analysis as well as tables and graphs

to help describe the results.

The Company Demographics section provides a graphical summary of the demographics of companies included

in this report.

The report’s Appendix lists information about the benchmarking data and Individual Company Reports in

OPEXEngine’s confidential portal, the study’s methodology and about OPEXEngine.

EXECUTIVE OVERVIEW

Revenue Growth Rates Strong, and Highest Ever for Private SaaS Vendors

This year, both private and public software and SaaS companies showed very strong revenue growth rate overall.

Private companies as a group had a median 41.7% annual revenue growth rate in 2013 – the highest median growth

rate since OPEXEngine began benchmarking in 2006.

Public software companies with revenues up to $300M had a median revenue growth rate of 18.3%; we believe the

median was driven down somewhat because of the much larger number of small and mid-sized public companies in

the data set this year and a mix of SaaS and hybrid (both SaaS revenues as well as revenue from perpetual license

products) companies. Pure SaaS public companies achieved an average of 30% annual revenue growth in 2013.

SaaS Vendors Show Highest Revenue Growth Rates

SaaS companies showed the highest median revenue growth rate at 59% in 2013 over 2012. On-premises firms

showed the lowest annual revenue growth. Companies with a large percentage of their revenues coming from

professional services showed significant revenue growth at almost 42% growth over the previous year.



2013 Median Operating Losses for Both Private and Public Firms

This year, we saw private firms increase operating losses from a median of 4.1% in 2012 to a median loss of 13% in

2013, similar to the median operating losses of 13.2% in 2010 and 13% in 2008. Public companies increased

operating spend beyond revenues for the first time since 2008 (before the recession), showing a median operating

loss of 8.2%.



Venture-backed Firms Achieve Dramatically Higher Growth Rates

Venture-backed firms are growing revenues dramatically faster than non-venture backed private firms with almost

4 times the revenue growth rates. Venture-backed firms spend far more in almost all operating departments with

higher headcounts than non-venture backed firms. Surprisingly, median gross margins and cost of revenues are

fairly similar while net cash from operations is positive at almost 6% of revenue for non-venture backed firms and

running at a median negative 14.7% of revenue for venture-backed firms.

Venture Investment Strong in Sector

Venture investment has continued to grow in the sector, with increasing investment over the past 3 years in early

stage firms under $10M, roughly level amounts in the mid-stage of $10M-$20M sized companies, and increasing in

the largest sized private firms. Some of the increase at the later stages of private firms is driven by private equity

investment at this stage in the sector.

Dollar Amount of Investment Capital Taken for Private Companies by Revenue

FY11 FY12 FY13

All Companies $28.0M $27.5M $27.7M

Under $10 Million * $4.8M $12.4M

$10 to $20 Million $16.6M $10.5M $13.8M

$20 to $40 Million $38.3M $46.3M $46M

Over $40 Million $37.5M * $89M

*Insufficient data

$20M+ Revenue Expansion Stage

We continue to see a trend among venture-backed firms with the following profile: high expense ratios in the

early stage, then improving cash flows and hitting break-even or close to break-even in the $10M-$20M stage;

followed by increasing growth spending, somewhat worsening expense ratios and worsening profitability in order

to build out infrastructure, customer acquisition, and marketing resulting in faster growth beyond $20M.

Software/SaaS Companies Establishing a Foothold between the East and West Coasts

This year, as last year, we’ve seen a significant increase in the number of software and SaaS companies based

outside the major tech centers on each US coast. We’re also seeing more bootstrapped companies, or companies

started with small amounts of angel funding, reach the $10-$20M revenue range as profitable companies.

Both of these trends are supported by new funding models of debt-based growth capital, greater outreach beyond

the coasts by the traditional tech venture community and an expansion of incubators and tax breaks for software

and innovation companies outside the traditional tech centers.

Revenue Growth Highest on the East and West Coasts for Private Firms

Private Public

East

Central and

Mountain

Region West East West

2013 over 2012 YTY Revenue Growth Rate 50.7% 24.9% 53.0% 18.0% 57.0%

Operating Income/Loss 2013 -33.8% 2.5% -26.8% -2.6% -18.4%

Overall Gross Margin Percentage on all Sales 66.3% 69.3% 57.2% 54.5% 64.1%

Cash Flow Negatively Impacted by Initial Growth Stages



The SaaS model with subscription revenues paid incrementally on a monthly or annual basis rather than up front as

with perpetual licenses makes very careful cash management an absolute requirement. In the early stages,

companies are spending faster than cash comes in the door as they build product, hosting capability and

operations. As companies grow, the subscription model allows companies to build significant levels of cash.

We see the most conservative cash management in early stage companies under $10M in revenues, where cash is

very tight. As company growth achieves momentum and firms have increased access to outside funding, they

appear to manage cash less tightly until reaching a point of positive cash flow in later stages.

We are also finding that as companies as companies grow, they tend to discourage long term contracts with

customers, which typically include discounts for the longer term payment. In the early stages of tight cash,

companies often are more likely to discount and sign longer contracts of two to three years if they can get up

front payments from customers.

Net Cash from Operations as a Percent of Revenue FY 2013

Private Public

All Private Companies

Less Than $10MM

$10MM to $20MM

$20MM - $40MM

More Than $40MM

All Public Companies

Net Cash from Operations as % of Recognized Revenue FY 2013 -7.40% -1.25% -11.53% -4.67% -5.98% 12.90%

Hiring Expectations Strong for 2014

Hiring expectations continue to be strong in 2014, with private companies expecting to increase headcount in

2014 by a median 26.4% (a slight increase over hiring expectations last year). Median hiring expectation for public

companies was 26.6 for 2014.



2008-2013 TRENDS

Over the 8 years that OPEXEngine has been benchmarking the Software and SaaS Industry, financial models have

been impacted by a confluence of events, particularly the rise of the SaaS business model and the 2008/2009

recession. Subscription models have been driving significant year-over-year revenue growth for both private and

public firms.

Private firms improved median operating losses from 2009 thru 2012, but then median levels dropped again in

2013 as firms increased spending over revenues from negative 4.1% to 13%.

Less than

$10MM

$10MM -

$20MM

$20MM -

$40MM

More than

$40MM

2013 over 2012 YTY Revenue Growth Rate 41.70% 59.00% 41.00% 46.00% 33.10% 18.30%

Anticipated growth in headcount during 2014

26.40% 30.70% 20.60% 31.40% 27.80% 26.60%

All Public

Companies

All Private

Companies

Recognized Revenue—

Private Companies



Public firms reacted to the recession by increasing profitability and have been slowly decreasing median profitability

since 2009. 2013 was the first year that public firms showed a median operating loss (8%).



COMPANY DEMOGRAPHICS IN 2014 BENCHMARKING



DETAILED BENCHMARKS FOR SAAS COMPANIES

Firms under $10 Million in 2013 Recognized Revenues

SaaS Companies

SaaS Companies

Less than $10

million

SaaS Companies Less

than $10 million

Less than $10 million

Average Contract

Size < $40,000

Average Contract

Size > $50,000

Average Recognized

Revenue $6,238,427 $3,865,679

$8,611,175

INCOME

STATEMENT AS

A % OF TOTAL

RECOGNIZED

REVENUE

Revenue Detail:

Perpetual License

Software Revenue

(excluding any SaaS

revenue) 1.6% 1.90% 1.40%

Software as a Service

Revenue 74.8% 83.90% 65.70%

Services Revenue

(Professional Services

and Training,

Excluding

Maintenance) 14.5% 6.50% 22.50%

Maintenance Revenue 6.2% 7.70% 4.70%

Other Revenue 2.9% 0.00% 5.80%

Total Recognized

Revenue 100.0% 100.00% 100.00%

2013 over 2012 YTY

Revenue Growth Rate 59.0% 70.90% 24.00%

Total Bookings as a %

of Total Recognized

Revenue 87.6% 90.70% 84.80%



SaaS Companies

SaaS Companies

Less than $10

million

SaaS Companies Less

than $10 million


Average Contract

Size < $40,000

Average Contract

Size > $50,000

Total Billings of

Recurring Revenue as

% of Total Recognized

Revenue 82.5% 87.30%

78.30%

Total Billings of

Recurring Revenue as

% of Total Bookings 134.0% 99.60% 164.10%

Calculated Billings

(Recognized Revenue

+ Change in Deferred

Revenue Between

2012 and 2013) as a %

of Total Recognized

Revenue 102.2% 112.80% 99.50%

% of Recognized

Revenue from direct

sales 87.6% 82.90% 92.40%

% of Recognized

Revenue from indirect

(channel) sales 10.4% 13.50% 7.60%

% of Recognized

Revenue from

customers outside the

United States 16.0% 16.00% 9.30%

% of 2013 Revenue

from acquired

company or

companies (where

2013 is first year

included in company's

revenue) 0.0% 0.00% 0.00%

Profit Metrics (as a

% of total

recognized

revenue)

Operating Income -31.9% -3.50% -53.70%

Net Income Before

Taxes -41.0% -14.20% -52.90%

EBITDA -29.6% -12.40% -39.50%



SaaS Companies

SaaS Companies

Less than $10

million

SaaS Companies Less

than $10 million


Average Contract

Size < $40,000

Average Contract

Size > $50,000

EBITDA (in dollars) -$2,893,695 ($1,391,116) ($3,423,000)

Gross Margin

Percentage on

Product Sales 71.1% 69.50% 72.80%

Gross Margin

Percentage on

Services 18.5% 20.80% 16.80%

Overall Gross Margin

Percentage on all

Sales 58.2% 61.10% 55.30%

Cost and Expense

Detail (as a % of

total recognized

revenue)

Cost of Products

(including software as

a service costs) 18.6% 18.00% 19.10%

Cost of Services 17.2% 10.20% 24.20%

Total cost of revenue

(cost of products +

cost of services) 35.8% 28.30% 43.20%

Research &

Development 39.7% 41.30% 38.10%

Sales & Marketing

Sales 34.1% 36.70% 31.50%

Marketing 16.0% 21.10% 10.90%

General &

Administrative 31.9% 29.80% 34.10%

Total Expenses 158.4% 159.40% 157.30%

OPERATING

EXPENSES AS A %

OF CALCULATED

BILLINGS

(Recognized

Revenue + Change

in Deferred

Revenue between

2012 and 2013)

Cost of Products 17.6% 15.10% 20.20%



SaaS Companies

SaaS Companies

Less than $10

million

SaaS Companies Less

than $10 million


Average Contract

Size < $40,000

Average Contract

Size > $50,000

Cost of Services 16.7% 9.40% 24.00%

Cost of Total

Revenue 34.3% 24.50% 44.10%

Research &

Development 36.3% 34.80% 37.90%

Sales & Marketing

Sales 31.3% 30.40% 32.10%

Marketing 14.3% 17.80% 10.70%

General &

Administrative 30.5% 25.30% 35.70%

Total Operating

Expenses 147.3% 134.80% 159.80%

OPERATING

EXPENSE DETAIL

RESEARCH &

DEVELOPMENT

EXPENSES

Total R&D Expenses

(As a % of Total

Recognized Revenue) 39.7% 41.30% 38.10%

R&D headcount 17.8 12.8 23

Total R&D Expense

per R&D Employee $134,716 $125,265 $143,171

R&D Compensation &

Benefits Expense (As

a % of Total R&D

Expenses) 81.4% 87.40% 75.40%

Total R&D

Compensation &

Benefits Expense per

R&D Employee $101,328 $101,328 $107,206

Percentage of R&D

Expenses that Was

Capitalized 0.0% 0.00% 0.00%

SALES EXPENSES

Total Sales Expenses

(As a % of Total


Sales headcount 10.0 7 11



SaaS Companies

SaaS Companies

Less than $10

million

SaaS Companies Less

than $10 million


Average Contract

Size < $40,000

Average Contract

Size > $50,000

Total Sales Expense

per Sales Employee $170,575 $138,495 $174,061

Sales Compensation &


a % of Total Sales

Expenses) 77.4% 78.30% 76.50%

Total Sales

Compensation &


Sales Employee $119,847 $94,167 $148,149

Total number of

quota-bearing

individual sales

contributors as % of

total sales headcount 61% 57% 61%

Total recognized

revenue per quota-

bearing individual sales

contributor $1,160,549 $905,824 $1,735,057

MARKETING

EXPENSES

Total Marketing

Expenses (As a % of

Total Recognized

Revenue) 16.0% 21.10% 10.90%

Marketing headcount 3.5 3.5 3.5

Total Marketing

Expense per

Marketing Employee $219,628 $220,896 $218,360

Marketing

Compensation &


a % of Total

Marketing Expenses) 37.5% 36.10% 38.80%

Total Marketing

Compensation &


Marketing Employee $76,394 $50,000 $83,230

PROFESSIONAL

SERVICES

EXPENSES



SaaS Companies

SaaS Companies

Less than $10

million

SaaS Companies Less

than $10 million


Average Contract

Size < $40,000

Average Contract

Size > $50,000

Total Professional

Services Expenses (As

a % of Total


Professional Services

headcount 11.0 0.5 13

Total Professional

Services Expense per


Employee $88,556 * $96,903


Compensation &


a % of Total


Expenses) 114.7% * 129.40%

Total Professional

Services

Compensation &



Employee $79,375 * $96,008

CUSTOMER

SUPPORT

EXPENSES

Total Customer

Support Expenses (As

a % of Total


Customer Support

headcount 6.5 6.5 7

Total Customer

Support Expense per

Customer Support

Employee $56,764 $59,049 $56,764

Customer Support

Compensation &


a % of Total

Customer Support

Expenses) 132.6% 76.20% 197.10%



SaaS Companies

SaaS Companies

Less than $10

million

SaaS Companies Less

than $10 million


Average Contract

Size < $40,000

Average Contract

Size > $50,000

Total Customer

Support

Compensation &


Customer Support

Employee $59,943 $46,741 $80,874

GENERAL &

ADMINISTRATIVE

EXPENSES

Total G&A Expenses

(As a % of Total


G&A headcount 5.5 3 9

Total G&A Expense

per G&A Employee $274,141 $295,147 $274,141

G&A Compensation &


a % of Total G&A

Expenses) 49.7% 57.50% 42.00%

Total G&A

Compensation &


G&A Employee $118,912 $119,082 $116,716

COMPANY-WIDE

EXPENSES - as %

of Total

Recognized

Revenue

Total Company

Compensation and

Benefits (as a % of

Total Recognized

Revenue) 95.8% 95.00% 96.50%

Total Company Stock

Option Expense (as a

% of Total Recognized

Revenue) 2.5% 3.40% 1.80%

Total Company Travel

and Entertainment (As

a % of Total




SaaS Companies

SaaS Companies

Less than $10

million

SaaS Companies Less

than $10 million


Average Contract

Size < $40,000

Average Contract

Size > $50,000

Total IT Expenses -

Including

Communications and

Email (As a % of Total


Total Facilities

Expense (As a % of

Total Recognized

Revenue) 5.1% 6.00% 4.00%

Average Total Legal

Expense ($) $142,488 $71,084 *

COMPANY-WIDE

EXPENSES - as %

of Total Expenses

Total Company

Compensation and

Benefits (as a % of

Total Expenses) 60.4% 59.00% 61.80%

Total Company Stock

Option Expense (as a

% of Total Expenses) 1.3% 1.80% 0.90%

Total Company Travel

and Entertainment (As

a % of Total

Expenses) 2.8% 1.90% 3.70%

Total IT Expenses -

Including

Communications and

Email (As a % of Total

Expenses) 2.9% 1.20% 4.90%

Total Facilities

Expense (As a % of

Total Expenses) 4.1% 4.40% 3.70%

Total Legal Expense

(as a % of Total

Expenses) 1.2% 0.70% *

EMPLOYEE

PRODUCTIVITY

Number of Employees

(FTEs) 55.0 39.5 56.5



SaaS Companies

SaaS Companies

Less than $10

million

SaaS Companies Less

than $10 million


Average Contract

Size < $40,000

Average Contract

Size > $50,000

Anticipated growth in

headcount during

2014 30.7% 34.90% 26.40%

Recognized Revenue

Per Employee $133,119 $132,166 $143,977

Calculated Billings Per

Employee $146,631 $146,631 $143,602

Bookings Per

Employee $79,200 $101,146 $70,105

Total Expenses Per

Employee $139,492 $126,415 $174,059

Operating Expenses

Per Employee $113,596 $107,965 $130,081

Operating Income Per

Employee -$30,266 ($7,422) ($58,627)

EBITDA per

Employee -$34,230 ($23,515) ($34,230)

Sales & Marketing

Spend per Employee $48,069 $46,328 $48,069

Travel and

Entertainment

Expenses Per

Employee $4,215 $2,638 $6,722

IT Expenses (including

communications and

email expense) Per

Employee $2,202 $1,560 $5,557

Facilities Costs Per

Employee $5,019 $4,853 $5,098

Compensation &

Benefits Expense Per

Employee $89,452 $82,621 $115,157

-Compensation &

Benefits per North

American FTE $89,452 $69,199 $124,232

-Compensation &

Benefits per FTE

outside North

America $69,974 * *



SaaS Companies

SaaS Companies

Less than $10

million

SaaS Companies Less

than $10 million


Average Contract

Size < $40,000

Average Contract

Size > $50,000

RECOGNIZED

REVENUE BY

GEOGRAPHIC

AREA (As a % of

Total Recognized

Revenue)

Americas 90.5% 87.30% 93.60%

EMEA 7.2% 9.30% 5.10%

Asia Pacific 2.3% 3.30% 1.30%

Total 100.0% 100.00% 100.00%

BALANCE SHEET

ITEMS

Cash & Cash

Equivalents (As a % of

Total Assets) 48.1% 63.30% 32.80%

Accounts Receivable

(As a % of Total

Assets) 29.2% 26.70% 31.70%

Deferred Revenue (As

a % of Total Assets) 53.7% 67.50% 39.80%

Cash & Cash

Equivalents (in

Dollars) $1,077,525 $1,080,767 $1,054,542

Cash Flow

Net Cash from

Operations (in

dollars) ($220,000) ($220,000) ($1,223,057)

Net Cash from

Operations as % of

Recognized Revenue -1.3% -0.80% -12.70%

Percent Change

Between 2012 and

2013 Balance Sheet

Items

Percent Change in

Cash & Cash

Equivalents 51.8% 144.70% 22.70%



SaaS Companies

SaaS Companies

Less than $10

million

SaaS Companies Less

than $10 million


Average Contract

Size < $40,000

Average Contract

Size > $50,000

Percent Change in

Accounts Receivable 8.5% 19.10% 1.70%

Percent Change in

Deferred Revenue 36.5% 62.80% -3.10%

Percent Change in

Total Assets 21.1% 37.40% 11.60%

PERFORMANCE

MEASURES

Asset Turnover (Net

Sales/Total Assets) 1.7 1.7 1.8

Return on Assets

(Net Profit Before

Taxes as a % of Total

Assets) -46.5% -37.00% -46.50%

Accounts Receivable

Days 51.7 35.8 61.8

KEY SAAS

METRICS

SaaS Revenue

Total Annual

Recurring Revenue

(ARR) $6,089,000 $2,281,794 $6,926,679

Change in Annual

Recurring Revenue

from 2012 to 2013 63.0% 63.00% 47.70%

Monthly Recurring

Revenue (MRR) as of

December 31 2013 $616,305 $275,230 $638,637

Change/Growth Rate

in Monthly Recurring

Revenue from Dec 31

2012 to Dec 31 2013 76.5% 76.50% 67.40%

Customer Metrics

Number of

Customers at end of

2013 277 595 129



SaaS Companies

SaaS Companies

Less than $10

million

SaaS Companies Less

than $10 million


Average Contract

Size < $40,000

Average Contract

Size > $50,000

Net percent change in

the number of

customers at the end

of 2013 from 2012 48.2% 48.20% 35.80%

Recognized Revenue

per Customer $29,781 $5,185 $55,155

Average Monthly

Revenue per

Customer for Dec

2013 $2,091 $469 $5,058

Average MRR per

Customer $1,558 $356 $5,745

Average Customer's

Total Lifetime

Revenue $157,450 $34,018 $277,210

Customer Lifetime

Value (CLV) (Average

MRR per Customer x

60 x Gross Margin x

Customer Renewal

Rate) $92,875 $11,507 $198,000

Average Customer

Acquisition Costs

(CAC) per Customer

in 2013 $12,849 $6,714 $77,428

CLV/CAC Ratio 3.5 3.4 3.9

Months to Recover

CAC: CAC/(Average

MRR per

Customer/Gross

Margin%) 6.9 6 6.9

Operating Expense

per Customer $28,440 $11,224 $95,600

Average Cost of

Service (platform,

operations, customer

support and

maintenance) per

Customer $3,622 $779 $9,616



SaaS Companies

SaaS Companies

Less than $10

million

SaaS Companies Less

than $10 million


Average Contract

Size < $40,000

Average Contract

Size > $50,000

Average Contract Size

During 2013,

Excluding Prototypes,

For Product A $43,800.00 $8,332.00 $106,500.00

Average Contract Size

During 2013,

Excluding Prototypes,

For Product B $35,000.00 * *

Number of Channel

Partners 1.0 1.0 3.5

Percentage of

customers that are $1

Billion + Enterprises 1.0% 1.00% 5.00%

Churn Rates

Customer Retention

Rate During Year 89.5% 79.00% 91.00%

Dollar Renewal Rate

During Year (As a %

of Total $ Value Up

for Renewal) 94.5% 93.50% 97.30%

PAYMENT TERMS

If upfront payment is

typically required

from customers, how

many months

payment do you

charge? 3.1 6 3.1

Average Term of a

Customer Contract in

Months 12.0 12 17

HOSTING

EXPENSES

Total hosting expense

(As a % of Total


Third-party hosting

expense (As a % of

total hosting expense) 86.2% 81.40% 91.10%



SaaS Companies

SaaS Companies

Less than $10

million

SaaS Companies Less

than $10 million


Average Contract

Size < $40,000

Average Contract

Size > $50,000

In-house hosting

expense (As a % of

total hosting expense) 13.8% 18.60% 8.90%

Number of

datacenters 1.0 1 1

Hosting expense per

data center $101,700

$107,200

$92,500

OTHER

INFORMATION

Number of years

since company was

founded 11 8

14

Dollar amount of

investment capital

taken over company's

life $12,434,523 $8,300,000 $12,434,523

Percent of companies

that are currently

venture-backed 62.5% 62.50% 62.50%

2014 Expectations

Expect more than

50% growth in 2014 56.3% 62.50% 50.00%

Expect between 20-

50% growth in 2014 12.5% 25.00% 0.00%

Expect less than 20%

growth in 2014 31.3% 12.50% 50.00%

Expect zero or

negative growth in

2014 0.0% 0.00% 0.00%

Other 0.0% 0.00% 0.00%

In 2014, do you

plan to:

Be acquired 0.0% 0.00% 0.00%

Acquire another

company 6.3% 0.00% 12.50%

Undertake an IPO 0.0% 0.00% 0.00%

Undertake another

fundraising 31.3% 37.50% 25.00%

None of these 62.5% 62.50% 62.50%



REPORT APPENDIX

ABOUT THIS REPORT

This report is based on a comprehensive, confidential benchmarking which tracks comparative financial ratios and

operating metrics by all participants overall and by public and private companies.

All firms participating in the benchmarking survey automatically receive access to their confidential Individual

Company Report, which is hosted in the OPEXEngine Survey Portal (www.opexenginesurvey.com). This

interactive tool presents the participating company's own ratios and data computed in a manner consistent with

those appearing in this report and displays the data alongside industry comparatives that users deem most

appropriate. (Representative screen shots from a sample Individual Company Report are illustrated below).

As shown below, users are able to select data aggregates that they feel are most appropriate to their business, and

that information will be reported alongside their own statistics.

Sample Individual Company Report

“Your Firm’s” Financial

Ratios and Operating Metrics

Compared to the

Appropriate Industry Norms

All figures can be

graphed and exported

to Excel or PDF.



HOW TO USE THE BENCHMARKING DATA

This report and the benchmarking portal have been designed to help business-to-business software and SaaS

companies compare their own performance and operations to that of similar companies. The statistics in this

report represent broad performance “yardsticks” against which a company's performance and business practices

can be assessed.

Most Benchmarks Reported as Median Figures

Most of the results included in this study are reported on the basis of medians rather than arithmetical averages or

means. Unlike the mean, the median is not distorted by a few unusually high or low values that may exist in the

sample due to special circumstances. The “median” value represents the mid-point of the data for a particular

measure, with one-half of the firms reporting figures above it and one-half below. Each median was computed

independently based on the companies that reported for that item. As a result, mathematical relationships do not

always exist when different ratios are used together in the calculation.

Smallest Number Largest Number

Reported Typical Reported

Lower 25% of

Reported

Figures

Middle 50% of Reported Figures

(or Middle Range)

Upper 25% of

Reported

Figures

Median

We did not use numbers if they were not reported in accordance with the survey instructions and definitions. In

cases where the data reported was considered inadequate for the computation of a meaningful figure, blank spaces

appear in the tables or an insufficient data (*) notation is included.

Every Benchmark is Computed Separately

Each benchmark is computing separately, meaning that each benchmark is an independent benchmark. So, for

example, one company’s operating expense ratios will add up to 100% of total operating expense, the benchmark

for Sales and Marketing expense, plus the benchmark for R&D expense, plus the benchmark for G&A expense, etc.

will not necessarily add up to 100 as each expense ratio is computed as an individual benchmark.

DATA ORGANIZATION IN THE ON-LINE BENCHMARKING PORTAL (this data is broken out into more detailed peer groups than are contained in the PDF report)

The detailed benchmarking data accessible from the OPEXEngine Benchmarking Portal have been segmented into

the following groupings:

Private Companies

All Private Companies

Recognized Revenue

Less than $10 Million

$10 Million to $20 Million



Number of Customers

Less than 200

200 to 1,000

More than 1,000



Region where Participants’ Headquarters is Located

East

Central and Mountain

West Coast

Number of Years Participant has been in Operation

10 years or Less

More than 10 years

Customer Size

More than 75% are <$1 Billion

25% or More are >$1 Billion

Revenue per Employee

Less than $125,000

$125,000 to $175,000

$175,000 to $275,000

Operating Expenses per Employee

Less than $90,000

$90,000 to $150,000

$150,000 to $225,000

Profit and Growth Leaders

Net Profit-Top 25%

Sales Growth-Top 25%

Venture-Backed Status

Venture-Backed

Not Venture-Backed

2012 Revenue Growth

Less than 35%

35% or More

2013 Growth Expectations

More than 50% Growth

20 to 50% Growth

Less than 20% or Negative Growth

On-Premise Participants

Firms with more than 40% Revenue from Professional Services

SaaS Participants

SaaS Participants by Recognized Revenue

Less than $10 Million


More than $20 Million

SaaS Participants by Average Contract Size

Less than $10,000

$10,000 to $50,000

More than $50,000

SaaS Participants by Number of Customers

Less than 200

200 to 1,000

More than 1,000

Public Companies



All Public Companies

Years in Operation

Less than 10 Years

10 Years or More

Public Companies by Customer Size

Greater than 75% of Customers are under $1 billion

Greater than 25% of Customers are over $1 billion

Region where Participant’s Headquarters is Located

East

West

SURVEY METHODOLOGY

This survey was fielded during the spring of 2014 to collect information about financial performance and key

business metrics. The benchmarks included in this report are generated from OPEXEngine’s seventh annual

operating survey and covers data from fiscal year 2013.

OPEXEngine primarily benchmarked Business-to-Business Software Companies that achieved recognized revenue

between $1 million and $300 million in 2013. Respondents participated via an online, secure survey form hosted

on OPEXEngine’s secure server. All responses were transmitted directly to OPEXEngine’s server, and no one

outside of OPEXEngine and its direct agents ever had access to the confidential data submitted for this survey.

Once the responses were collected, a confidential company identification code was assigned to each participant.

The data were then edited by OPEXEngine’s financial analysts for accuracy and consistency. Statistical processing

was performed on all data to insure statistical validity and to produce the financial ratios and operating statistics

contained in this report.

DISCLAIMER

The statistical information contained in this report is believed to be representative of the companies responding to

the survey. All reasonable efforts were taken by OPEXEngine and its agents to assure data comparability within

the limitations of accounting reporting procedures. However, the data used in this report are not necessarily

based on audited financial statements and the statistical validity of any given number varies depending upon sample

sizes and the amount of consistency among responses for that particular ratio. OPEXEngine and its agents,

therefore, make no representations or warranties with respect to the results of this study and shall not be liable to

clients or anyone else for any information inaccuracies, or errors or omissions in contents, regardless of the cause

of such inaccuracy, error or omission. In no event shall OPEXEngine or its agents be liable for any consequential

damages.

ABOUT OPEXENGINE

OPEXEngine is the leading developer of detailed financial and operating benchmarks for the tech industries

as well as convenient, customizable online EDGAR dashboards. OPEXEngine was founded by operating

executives with decades of experience in finance, sales, marketing, and general management of technology

companies and technology investment banking.

OPEXEngine donates 5% of its income to children’s charities. For more information, see

www.opexengine.com or call at: 617-674-4218.

http://www.opexengine.com/

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