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:
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.