January 19, 2022

Volume XII, Number 19

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January 18, 2022

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New Data From KeyBanc Demonstrates SAAS Companies Poised to Power the Post-Pandemic Recovery in 2022

While the pandemic shutdowns of 2020 have led to supply chain disruptions, dampening growth across the physical universe, SAAS companies have rebounded strongly as the workforce relied on accelerated digital transformation to live, work, and play. 

New data demonstrate that SAAS companies are poised for robust growth in 2022.  A recent report from KeyBanc Capital Markets (KBCM) analyzes survey results of private SaaS companies conducted in June and July 2021. For this year’s survey, KBCM included responses from senior executives at more than 350 companies. 

Below are some of the key findings from the survey analysis.

  • KBCM found a reacceleration of growth as companies recovered from the economic disruptions caused by COVID-19.

  • Survey respondent forecasts for 2021 show growth levels increasing back to a median of 36% for companies with more than $5 million dollars in annual recurring revenue (ARR), as the disruptions from COVID-19 become less severe.

  • Like many industries, the global private SaaS sector experienced a slowdown in growth during 2020. Median growth slowed to 28%, notably below the pre-pandemic range of 35-40% which the survey has historically polled.

  • Median ARR historical growth of 28% aligns with Fall 2020 SaaS Survey COVID Edition results. Historically, median growth for participants in our surveys has been in the 35-40% range, underlining COVID’s impact on SaaS businesses in 2020.

  • Forecasted growth for 2021 was 36%, significantly higher than for 2020.

  • Exit expectations on public listings were so high that they nearly equaled those focusing on acquisition by both financial sponsors and strategic buyers.

  • Valuation statistics showed a median multiple of 8.4 times annual recurring revenue in a capital raise or change of control since January 2020.

  • As expected, companies anticipating an eventual public listing are growing significantly faster and burning more – specifically on Sales and Marketing. These companies are also able to drive more upsell and expansion revenue evidenced by strong net dollar retention.

The full survey results can be found here.

© 2022 Foley & Lardner LLPNational Law Review, Volume XI, Number 306
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About this Author

 Louis Lehot Private Equity Attorney Foley and Lardner Law Firm
Partner

Louis Lehot is a partner and business lawyer with Foley & Lardner LLP, based in the firm’s Silicon Valley, San Francisco and Los Angeles offices, where he is a member of the Private Equity & Venture Capital, M&A and Transactions Practices as well as the Technology, Health Care, Life Sciences and Energy Industry Teams. Louis focuses his practice on advising entrepreneurs and their management teams, investors and financial advisors at all stages of growth, from garage to global. Louis especially enjoys being able to help his clients achieve hyper-growth, go public and to...

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