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What is the maximum ARR a saas company can get with only 1 product?
Hello! Thanks for asking Wonder for the maximum ARR a SaaS company can achieve with only one product.
In short, some of the most successful SaaS companies with only one product have ARRs ranging from $100 million to $500 million, so the average ARR would be $300 million. Below, please find the results of my research, along with my methodology.
METHODOLOGY
I began by looking for the most successful SaaS companies that offer a single product. The SaaS Success Database gave me a starting place. I also searched business and SaaS-focused news sources to find relevant companies. I reviewed the website of each company I encountered to determine if they have more than one product, and if so, I disqualified them. I then searched company websites and business news sources to find data on the annual recurring revenue (ARR) for each company.
Slack hit $100 million in annual recurring revenue (ARR) and over 1 million paid seats in the summer of 2016. According to a February 2015 Business Insider, Slack was "adding $1 million in annual recurring revenue (ARR) every 11 days, on top of the $12 million in ARR it’s built up over the last year." The company has grown from 15,000 daily users to over 500,000. A 2016 article outlines Slack's growth over the since June of 2015, stating that at that time it had 300,000 paid seats and an ARR of $25 million. By the end of 2015, it has 570,000 paid seats and an ARR of $50 million. In February 2016, it had 675,000 paid seats with an ARR of $64 million, and two month later had grown to 800,000 paid seats and its ARR was at $75 million. Slack's valuation is at $3.8 billion.
New Zealand-based Xero provides cloud-based accounting software for small businesses, connecting them with accountants and bookkeepers. In 2014, the company reported more than 120,000 Australian customers and 50,000 UK customers, generating "$NZ100m in Annualized Recurring Revenue (ARR)," approximately $70.55 million in US dollars. A 2016 Investor Presentation lists an ACMR (annualised committed monthly revenue) of $NZ149 million. In a November 2016 press release, the company announced it had surpassed $300 million in ARR. As of February 2015, Xero was valued at around $2 billion.
According to Business Insider, Dropbox, which provides cloud-based file sharing and storage, has an ARR of $400 million. As of February 2015, Dropbox was valued at over $1 billion.
Founded in 2005, Workday provides a cloud-based HR and finance solution. In 2012, the same year the company went public, they had an ARR of $250 million and were growing at 90%. A 2014 article states that Workday does not disclose its ARR, but offers its average subscription revenue per customers, $354 million, as a proxy. A 2016 Workday Financial Analyst Day presentation document offers a subtle reference to the companies currently having over $500 million ARR (in a small note on page 100). As of February 2015, the company was valued at $14.9 billion.
SUMMARY
To sum up, the largest and most successful SaaS companies that offer a single product have an average annual recurring revenue (ARR) of approximately $300 million.
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