Zuora SEI Report: Flexible, Recurring Monetization Models Drive 3.4x Faster Growth Rates Than the S&P 500 Over the Past 12 Years
In 2023, amid economic challenges and slowed digital transformations, companies in the SEI demonstrated resilience through Total Monetization strategies. By aligning and evolving their monetization models with customer demand, they pursued innovative approaches beyond traditional subscriptions, including hybrid and flexible bundling strategies. This agility and customer focus have driven sustainable growth despite market uncertainties.
In the latest SEI report,
- Companies in the SEI continue to outpace the S&P 500: In 2023, companies in the SEI experienced a 10.4% revenue growth rate on average compared to 6% for the S&P 500.
- Customer acquisition slowed, but retention is up: While customer acquisition slowed in 2023, companies in the SEI are retaining their customers, with churn numbers lower than the previous three years.
- Customer expansion, or annual revenue per account (ARPA), is on an upward trend and slightly improved in 2023: Starting with a quarterly growth rate of 0.73% in Q1 2023, ARPA growth ended the year over 2x stronger at 1.76% in Q4. The quarterly average also improved year-over-year, with 1.5% growth in 2023 compared to 1.29% in 2022.
- While growth rates slowed in the SaaS sector, churn is down and consumption-based models are continuing to demonstrate promising revenue growth: The SEI SaaS sector experienced a 10.1% revenue growth rate on average. The 6-year compound annual growth rate (CAGR) for SEI SaaS companies employing consumption-based models reached 20.1% in 2023 compared to 16.3% for the non-consumption counterparts.
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In the
Media & Entertainment sector, the New Media subset experienced faster revenue growth, but Publishing Media successfully expanded subscriber count over time:Media & Entertainment experienced a revenue growth rate of 6% on average in 2023. While the New Media subset experienced a faster revenue growth rate (12%) than Publishing Media (5.6%), Publishing Media grew ARPA year-over-year (YoY), while New Media ARPA growth slowed.
“Staying competitive means embracing agility and flexibility to incorporate a diverse mix of business models as opposed to a reliance on any single approach,” said
Zuora’s SEI report analyzes the growth and resilience of over 600 recurring revenue businesses based on anonymized, aggregated, system-generated activity on the Zuora Billing service. The latest report includes data by sector in SaaS,
To read the full report, visit here.
About
Forward-Looking Statements
This report contains forward-looking statements that involve a number of risks, uncertainties, and assumptions, including but not limited to statements regarding the expected growth and trends of recurring revenue-based companies, such as subscriptions (including companies in the SEI report) and non-recurring revenue based companies. Any statements that are not statements of historical fact may be deemed to be forward-looking statements, and actual results could differ materially from those stated or implied in forward-looking statements. This report also includes market data and certain other statistical information and estimates from industry analysts and/or market research firms.
© 2024
SOURCE: ZUORA FINANCIAL
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