New Maxio Report Reveals How Billing Models Impact B2B SaaS Companies Success During Econo

ATLANTA--(BUSINESS WIRE)--Maxio, the industry-leading billing and financial operations platform for B2B SaaS companies, today unveiled the latest findings from the Maxio Institute, the company’s research and analytics group.

The analysis of billing data from over 2,000 companies in the first six months of 2023 indicates that B2B subscription businesses continue to expand even amidst economic challenges. However, their annual growth rates have seen a steep decline of nearly 50% compared to the same period a year ago, when they ranged between 25% and 30%.

One of the most profound findings from the research study is that companies' billing methods have a direct impact on their sensitivity to economic changes and growth trajectories.

In 2022, SaaS companies that employ consumption- and usage-based billing models experienced a particularly sharp quarter-over-quarter decline in growth rates, dropping from an average of 38% in Q1 2022, to just 17% in Q2 2022. The downturn likely resulted from sudden market shifts and customers' option to reduce their SaaS spending.

This trend persisted until Q1 2023, with growth rates dropping to only 8%. Yet, these companies’ adaptable billing models then seemed key to their recovery, leading to a 50% spike in growth rates by Q2 2023.

On the other hand, SaaS companies with long-term contracts demonstrated greater resilience to economic impacts, even experiencing an increase in growth rates during the first six months of 2022. However, they have subsequently faced a steady decline quarter-over-quarter in 2023, culminating in a growth rate of just 17% in Q2 2023. This represents a 4X decrease from their 39% growth rate in Q2 2022, which is likely due to these contracts, often annual or bi-annual, coming up for renewal during this period.

The difference in growth rates between these two types of subscription billing models is most pronounced in companies with less than $1MM in annual recurring revenue (ARR).

Consumption-based businesses within this revenue range have been consistently struggling, with a worsening trend over the last six consecutive quarters, resulting in a negative 20% growth rate by the end of Q2 2023. In stark contrast, companies employing subscription invoicing models have thrived, experiencing some of the highest growth rates in the industry, with an impressive average of 60%+ growth across the last six quarters.

“As B2B SaaS companies continue to navigate an uncertain economic environment, our research shows that it’s now more important than ever to adapt your billing models to achieve and maintain sustainable growth,” said Randy Wootton, CEO of Maxio. “Having comprehensive insights into every aspect of your financial operations is crucial to creating optimal pricing strategies that not only serve your clients’ needs but also shield your businesses from sudden shifts and unexpected downturns.”

The Maxio Institute's latest research also reveals an ongoing trend where B2B SaaS success is not confined to Silicon Valley. In fact, the top-performing companies in Maxio's analysis have consistently achieved growth rates 22%-28% higher than their counterparts in the Bay Area in the last 18 months.

Access the full report here.

Methodology

The Maxio Growth Index analyzes anonymized year-over-year customer billing data from the Maxio billing and financial operations platform, which currently processes over $13B in billing and invoicing data annually. Maxio has over 2,000 customers, most of which are VC- or PE-backed software-as-a-service (SaaS) companies with revenue between $1M and $100M.

About Maxio

At Maxio, we help B2B SaaS companies unlock their next stage of growth. Our financial operations platform is designed to meet the unique financial challenges of B2B SaaS, including billing, subscription management, revenue and expense recognition, and SaaS metrics and analytics. Today, Maxio serves more than 2,000 customers and processes more than $13B in revenue for those customers.

Contacts

Dave Kart
Head of Marketing
dave.kart@maxio.com

First published on Fri, Aug 18, 2023

Liked what you read? That’s only the tip of the tech iceberg!

Explore our vast collection of tech articles including introductory guides, product reviews, trends and more, stay up to date with the latest news, relish thought-provoking interviews and the hottest AI blogs, and tickle your funny bone with hilarious tech memes!

Plus, get access to branded insights from industry-leading global brands through informative white papers, engaging case studies, in-depth reports, enlightening videos and exciting events and webinars.

Dive into TechDogs' treasure trove today and Know Your World of technology like never before!

Disclaimer - Reference to any specific product, software or entity does not constitute an endorsement or recommendation by TechDogs nor should any data or content published be relied upon. The views expressed by TechDogs' members and guests are their own and their appearance on our site does not imply an endorsement of them or any entity they represent. Views and opinions expressed by TechDogs' Authors are those of the Authors and do not necessarily reflect the view of TechDogs or any of its officials. While we aim to provide valuable and helpful information, some content on TechDogs' site may not have been thoroughly reviewed for every detail or aspect. We encourage users to verify any information independently where necessary.

Tags:

Financial Management SolutionsMaxio Financial Operations Platform B2B SaaS Companies

Join The Discussion

Financial Technology