The software-as-a-service sector, which had experienced a vibrant 21% annual revenue growth just a few years ago, saw that metric sink to just 12% in 2024, according to a new analysis by BDO.
The news was even worse for enterprise-sized SaaS firms (those with more than $1 billion in sales), with last year’s revenue growth falling to just 10%. Midsize players (with $250 million to $1 billion in sales) saw that growth slip slightly to 15%, after peaking at 28% in 2021.
The first quarter of this year brought no relief, as SaaS revenue growth dropped by 2%, equaling the sector’s poor quarterly performance in early 2024.
The report noted that there may be some seasonality in play, as “the first quarter marks the beginning of spending annual budgets for many” and “companies and consumers alike may be seeking to tighten their belts at the start of each new year.”
BDO opined that by the end of 2025, the industry’s growth will reflect a similar trajectory as 2024, with revenue picking back up in subsequent quarters. Read more.