SaaStr · 2021-04-18 · 1872d

The Compounding Nature of SaaS: Why Revenue Growth Accelerates at Key Inflection Points

Jason Lemkin explains that SaaS businesses compound, meaning they are difficult to launch but accelerate dramatically once key revenue milestones are reached. The article identifies critical inflection points ($2M, $10M, and $25-30M ARR) where business dynamics fundamentally shift from struggle to inevitable success.

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Metrics in this report

NRR Doubling Timeline at 110%

8years

median

Revenue doubles with zero new customers

NRR Doubling Timeline at 120%

5years

median

Revenue doubles with zero new customers

Okta Path to $2B ARR

14years

actual

Time from founding to $2 billion ARR milestone

Salesforce Operating Margin Expansion

16.8% to 32.8%%

FY20 to FY25 guidance

Margin improvement over 5 years

Salesforce Revenue Growth

5.4B to 38.0B$B

FY15 to FY25 guidance

Public SaaS company annual recurring revenue

Shopify Quarterly Revenue Growth

9M to 989M$M

Q1 2013 to Q1 2021

Public SaaS company quarterly revenue