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The State of Subscription Apps with RevenueCat’s CEO Jacob Eiting and Growth Advocate David Barnard

SaaStr

In this week’s Workshop Wednesday, RevenueCat CEO Jacob Eiting and Growth Advocate David Barnard share their annual State of Subscription Apps report with us. So, let’s look at the state of subscription apps and how B2B SaaS can learn from it. Churn is much higher on consumer subscriptions, but you have higher expansion revenue.

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A Look Back at Q1 '24 Public Cloud Software Earnings

Clouded Judgement

It’s worth pointing out that Azure is a bit above the long term trendline, while AWS is still below (but accelerating up). At $200M+ ARR, businesses have built up a substantial base of recurring revenue streams that have already paid back their initial CAC. Some software companies also have seasonality in the “payback.”

Cloud 315
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A Look Back at Q4 '23 Public Cloud Software Earnings

Clouded Judgement

It looks at the YoY dollar change in quarterly revenue from the hyperscalers (just looking at Azure / AWS because the data goes back further) going back a few years. If we break this down and look at Azure and AWS independently (graphs below), you’ll see how the AWS “swings” were a lot more volatile.

Cloud 180
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Clouded Judgement 6.9.23 - Recap of Consumption Trends in Q1 '23

Clouded Judgement

Very healthy new business (new customer) acquisition. Most public companies don’t report net new ARR, so I’m taking an implied ARR metric (quarterly subscription revenue x 4). Companies that do not disclose subscription rev have been left out of the analysis and are listed as NA.

Trends 130
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SaaS companies quickly replacing subscriptions with usage-based pricing

OPEXEngine

The pricing model, which leads to increases or decreases in revenue based on how much customers engage with a service, has been gaining on the more traditional subscription model as the main way SaaS companies make money. It has tended to be used most in infrastructure platforms, like AWS, Google Cloud, and Azure. Enterprise companies.

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Is Tableu and Salesforce an expensive deal for Salesforce?

SaaStr

Tableau was at >$900m in recurring revenue … growing 41% (!). And subscriptions were growing 115%. And Salesforce doesn’t seem to screw up its bigger acquisitions. There aren’t that many things of true scale, that are strategic, that Salesforce could buy at this stage. Tableau Reports First Quarter 2019 Financial Results.

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Four Sales Compensation Tactics for Consumption-Based GTM with MongoDB’s SVP of Sales

SaaStr

Then, we moved to a more customer-friendly model with SaaS and subscription-based pricing. What’s evolved over the years and is driven by hyper-scalers like Google Azure, AWS, Twilio, and Stripe is the consumption-based model. The first might be market acquisition. There are still some complexities around SaaS-based approaches.