Report · report

State of the Cloud 2023

Kent Bennett, Talia Goldberg, Mike Droesch and others · Bessemer Venture Partners Free Advanced

The good, better, best NRR bands (100, 110, 120 plus) that boards actually benchmark against, sitting alongside the efficiency metrics they get judged with.

  • CAC payback benchmark: 12 to 18 months is good, 6 to 12 is better, 0 to 6 is best.
  • Public cloud market capitalisation peaked at 2.7 trillion dollars in November 2021.
  • Around 50 new Centaurs (100 million dollars of ARR) were minted in 2022, short of the roughly 70 predicted.
  • Growth is again worth about twice a point of free cash flow margin, after the two traded one for one in late 2022.
Open on bvp.com ↗

It answers 4 questions

  1. What is net revenue retention and why does every investor keep asking me for it?
  2. What is the difference between gross retention and net retention, and which one should I watch?
  3. How did Snowflake reach 158 percent net revenue retention, and what is actually copyable?
  4. What NRR should a genuinely best-in-class company target in my segment?

Read with it

  1. The formula written out term by term, with the three performance bands. The right first read if you have been nodding along in... Stripe Article · 9 min read Net revenue retention (NRR): What is NRR and why does it matter for SaaS businesses? Stripe
  2. The benchmark study everyone quotes: good and great net revenue retention by business type, built from 20 growth experts plus... Lenny's Newsletter Newsletter · 15 min read What is good retention? Lenny Rachitsky
  3. Kellogg's argument that churn has too many definitions to be trustworthy, and that private companies should measure NDR the way... Kellblog Essay · 10 min read plus slides Churn is Dead, Long Live Net Dollar Retention Dave Kellogg
  4. The cleanest definition of expansion MRR with the formula and the benchmark that matters: top companies get up to 40 percent of... Chargebee Article · 7 min read Expansion MRR: Definition, Formula, and Impact on SaaS Growth Chargebee
  5. Accel's argument that expansion revenue is the specific thing that carries a company past $50M ARR, with the Twilio and Shopify... SeedToScale by Accel Article · 9 min read How can SaaS startups tackle scaling beyond $50mn in ARR? Vyushita Sahay
  6. The net retention numbers by pricing model (122 percent top quartile for usage-based versus 109 percent without) plus the... TechCrunch Article · 10 min read Usage-based pricing is a company-wide effort Kyle Poyar
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