Purchasing Patterns in Software : Positivity Punctuating Q3
Tomasz TunguzVenture Capitalist If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. Purchasing Patterns in Software : Positivity Punctuating Q3
Vendr’s quarterly report on SaaS purchasing trends summarize the sentiment of the software market. Q2 was tough but Q3 is looking up. The average sales cycle has lengthened from 32 to 44 days for net new software, a 37% increase. Slower cycles & fewer new purchases : 19% of software purchases are net new in 2023 ; just 17% in Q3. Still about 1-in-5, but down from 30% last year. In a challenging market where new customers are a challenge, how does a company grow? Increase price & cross-sell. Average contract values rose 43% q/q - nearly the average over this time period. What’s selling? BI, data integration, data science + analytics top the podium. One last notable data point : DataDog’s ACVs are twice as high as any other vendor in the report at $220k. Salesforce, Cloudflare, & Netsuite are next with ACVs in the $100k-$120k range. That $220k number is 3x DataDog’s current ACV & it’s driven by a remarkable push up-market & cross-sell effort detailed in their earnings report earlier this week. Doubling down on existing customers & growing those accounts have been the dominant way to drive growth during this challenging year. |
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