🚀 Scaling to $100 Million

This report by Bessemer Venture Partners offers comprehensive benchmarks & insights for cloud companies aiming to reach $100 million in Annual Recurring Revenue (ARR). Below is a summary of key metrics, figures, & formulas presented in the report:

1. Annual Recurring Revenue (ARR) Growth:

Early-Stage Growth: Companies with $1–10 million in ARR experience an average growth rate of nearly 200%.

Later-Stage Growth: For companies surpassing $100 million in ARR, the growthrate averages around 60%.

Growth Endurance: This metric measures the retention of growth year-over-year, averaging approximately 70% in the private cloud sector.

2. Retention Metrics:

Gross Retention Rate: Indicates the percentage of recurring revenue retained from existing customers, excluding upsells. The average is approximately 85% or higher.

Net Retention Rate: Accounts for upsells, cross-sells, & downsells, averaging around 120% or more.

3. Gross Margins:

Average Gross Margin: Throughout a cloud company's lifecycle, gross margins typically range between 65% and 70%.

4. Operating Expenses as a Percentage of Revenue (by $100M ARR):

Research & Development (R&D): Approximately 35%.

Sales & Marketing (S&M): Around 50%.

General & Administrative (G&A): Close to 20%.

5. Free CashFlow (FCF) Margins:

At $100M+ ARR: Companies often reach an average FCF margin of -35%, indicating a path toward profitability.

6. Valuation Multiples:

Early-Stage Valuations ($1–10M ARR): Average valuation multiples are around 30x ARR.

Growth-Stage Valuations (Beyond $10M ARR): Multiples typically decrease to approximately 15x ARR.

Recent Trends (2020/2021): The average multiple has risen to 20x, with top private cloud companies receiving valuations up to 34x ARR.

7. Customer Acquisition Cost (CAC) Payback Period:

Definition: The time required to recoup the costs associated with acquiring a new customer.

Benchmark: While specific figures vary, a shorter CAC payback period is indicative of efficient growth strategies.

ARR Valuation Multiple: Calculated as Company Valuation divided by ARR.

Example: A company with $10 million in ARR valued at$100 million has an ARR valuation multiple of 10x.

These benchmarks and metrics serve as a guide for cloud companies striving to scale efficiently and achieve significant ARR milestones.

Author

AiUTOMATING PEOPLE, ABN ASIA was founded by people with deep roots in academia, with work experience in the US, Holland, Hungary, Japan, South Korea, Singapore, and Vietnam. ABN Asia is where academia and technology meet opportunity. With our cutting-edge solutions and competent software development services, we're helping businesses level up and take on the global scene. Our commitment: Faster. Better. More reliable. In most cases: Cheaper as well.

Feel free to reach out to us whenever you require IT services, digital consulting, off-the-shelf software solutions, or if you'd like to send us requests for proposals (RFPs). You can contact us at [email protected]. We're ready to assist you with all your technology needs.

© ABN ASIA