5 software industry benchmarks
TRANSCRIPT
1 Public Software Companies
We studied public so.ware companies from $10 million to $100 billion in revenue.
340 Companies in
the study
Public Software Companies
The ones under $100 million were only able to grow at 10%
2 Revenue Growth
Public Software Companies
Forget the losers, the ones that grew, actually grew at 18% last year.
8% Average Growth
Your growth rate depends on Sales and Marke?ng Quar?le S&M as a % of
Revenue Revenue Growth
Top quarAle 55% 45% 2nd quarAle 33% 20% 3rd quarAle 27% 11% BoIom quarAle 25% 5%
The op?mal rate of growth for profitability is 8% -‐ 12% as this produces profit of 10% of revenue.
3 Revenue per Employee
Public Software Companies
For companies under $100 million revenue, the average was $240,000
$331,000 Average
Revenue per Employee
4 Sales and Marketing Spending
Public Software Companies
And that computes to 54% of Gross Profit.
34%
Sales and marketing as a %
of revenue
But spending too much or too liVle is disastrous
For op?mal profitability you should be spending 27% of revenue on sales and
marke?ng
The average firm is spending 2.4 ?mes as much on Sales and Marke?ng as they do
on Research and Development
Sales and Marke?ng is much bigger than R&D
5 Capital Required
But if you’re profitable that drops to 154%
235% Equity as a % of Revenue
Public Software Companies