Category Archives: NDR

Pulse 2021 Slides: Net Dollar Retention (NDR) Benchmarks and Thoughts

This is a quick post to share the slides I presented today at the GainSight Pulse Everywhere 2021 conference in a session entitled Net Dollar Retention, Key Benchmarks at $50M, $200M, and $1B in annual recurring revenue (ARR).

In the session we discuss:

  • The answer, which is 104%.  (Median NDR which is surprisingly invariant across size.  Exception:  public company NDR median is 111%.)
  • Problems with historical installed-base valuation metrics such as churn, customer lifetime (CLT), and lifetime value (LTV), building on my SaaStr 2020 presentation, Churn is Dead, Long Live NDR.
  • The rise of NDR as the SaaS metric of choice.
  • How NDR is currently the most powerful predictor (among common alternatives) of a company’s revenue multiple (EV/R).
  • The “dollar” in net dollar retention and why global companies should look at NDR using constant currencies, not dollars converted at a spot rate.
  • How NDR should vary as a function of stage, expansion model, business model, target market, sales motion, and pricing model.
  • How usage-based (aka, consumption-based) pricing models will be as transformation to subscription SaaS as subscription SaaS was to perpetual license software.

The deck has an rich appendix with interesting information clipped from a variety of my favorite sources, including RevOps^2, Meritech Enterprise Public Comps, OpenView Expansion SaaS Benchmarks, OpenView Usage-Based Playbook, Bessemer State of the Cloud, KeyBanc SaaS Survey (PDF), SEC filings, and others.

Here are the slides, which I’ve also embedded below:

 

I’d like to thank Ray Rike at RevOps^2 for giving me early access to his upcoming FY20 B2B SaaS Benchmarks report.

If GainSight makes a video available online, I’ll add a link to it, here.  Meantime, thanks to GainSight for having me and hope you enjoy the presentation.

Video of My SaaStr 2020 Presentation: Churn is Dead, Long Live Net Dollar Retention

Thanks to everyone who attended my SaaStr 2020 presentation and thanks to those who provided me with great feedback and questions on the content of the session.  The slides from the presentation are available here.  The purpose of this post is to share the video of the session, courtesy of the folks at SaaStr.  Enjoy!