After years of rapid growth for SaaS, the industry has entered a new normal. While the pandemic buoyed the sector to new heights and seemed to represent an era of easy sales and soaring customer demand, the data shows that we are now in a period of correction.
While SaaS businesses are still growing in 2023, they are growing slower than they were during the pandemic. Revenue growth is now averaging 11 per cent, according to Paddle’s data – down from 45 per cent from 2022 – while churn rates are also currently 9.6 per cent higher than they were at this time last year.
These figures reflect a period of ‘normalisation’ post-pandemic, marked by rising interest rates and enterprises cutting down on their software expenditure.
What does this mean for the SaaS market? It is not all as bad as it seems. The industry is still growing and it is becoming clear that many of the pandemic-inspired changes to our ways of working are sticking around, meaning that there are still scaling opportunities for SaaS businesses.