AI Commoditization and the Collapse of Net Dollar Retention in SaaS

Analysis of 374 quarterly observations from 25 public software companies reveals declining net dollar retention (NDR) from 125% in 2022 to 112% in 2025, with the bottom quartile falling below breakeven at 101% NDR in Q1 2026. Simple, commoditized products like Zoom (98%), Asana (96%), and Bill.com (94%) face accelerating losses from macro pressure, competition, and AI-driven alternatives. The 'Sword of Damocles' threatens even market leaders, as seen in GitHub Copilot losing share to Claude Code and OpenAI Codex within six months of their launch.