The State of SaaS & AI - By the Numbers with Brad van Leeuwen, Co-Founder and COO Cledara

**Ray Rike** (0:00)
Hello, I'm Ray Wright, Founder and CEO of Benchmarkit, and your host of the Metrics It Measure Up podcast. We talked to a wide variety of the top B2B SaaS and Cloud thought leaders, CEOs, executives, investors, and people just like you to discuss the metrics and benchmarks they use to make metrics informed and benchmark validated decisions. Now, on to today's show.
Welcome to today's episode of the Metrics It Measure Up Podcast. Today, I am joined by Brad van Leeuwen, the co-founder and COO of Cloudera. Today, we'll be covering four primary topics with Brad. First, the state of SaaS spend management in 2024 Second, the impact of AI native software on the SaaS category. Third, the top AI software companies. And fourth, the impact of AI on a SaaS company sells and marketing by the numbers. Brad, can you please take a moment to give a brief overview of your journey to becoming a guest here in the Metrics that Measure Up podcast. The following is a public SaaS announcement. Has your company experienced the challenge of achieving efficient, profitable growth over the last few quarters? Are you interested in learning more about how SaaS companies use metrics and benchmarks to drive decisions that optimize growth and maximize enterprise value?

**SPEAKER_3** (1:33)
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**Brad van Leeuwen** (1:48)
Well, and thank you very much for having me. I'm excited to be back for a second time here with you. So I'm one of the founders of a company called Cloudera. What we do is we help our customers, which are businesses, discover, purchase and manage the SaaS they use to run their company. We've got more than a thousand customers in 30 plus countries. And what I'm really excited about is, A, obviously we help our customers a ton, which is why we have so many of them. But B, we get a real time view into what's happening in the SaaS market today.

**Ray Rike** (2:22)
So I love your background. So I thought you'd be the perfect person to ask this first question. Because over the last two years, the SaaS category has been experiencing drastic changes, especially measured by growth rates, but also by enterprise value to revenue multiples. Some people even call this in the investment community, the SaaS occur because multiples are down from around 11x down to 5.3 to 5.9.
What does the Cloudera SaaS Ben data say about the state of the SaaS industry here in 2024?

**Brad van Leeuwen** (2:56)
Well, it's a big question. I think, look, like everyone, I keep an eye on public markets and particularly what's happening in the SaaS world. I have a slightly different view there. So yes, multiples have come down, but that doesn't seem to be because markets like SaaS Lest, what's actually happened in the last couple of years is the growth rates for SaaS companies have come down. And so if you look at like a plot of growth rate versus multiple, the multiples of the companies that are growing the fastest look kind of like they did in then at those same growth rates, right? So what's happened is the whole market has sounded a little tougher to sell. And this is something that we see in our data too, right? We see a bunch of things that are making it harder. So number one, we're seeing that buyers of software, they're allocating more budget than ever to renewals versus new purchases, right? So if you're trying to sell a NetEU logo, it's just way harder. There's less budget that you're fighting for, right? The amount of budget that companies are allocating to new logos has gone down by more than half on new SaaS purchases. That's thing number one.
Thing number two is that when they are renewing, they're looking to renew for longer periods. So companies are looking to lock in the software that they use and get value from, but they're doing it because they want to save money, right? So usually the longer the contract, unless you're going to be paying, very simply, you pay monthly, you're going to be paying more than you are if you're paying annually. And we've seen a big shift from monthly renewals to annual renewals. And that's just going to be a headwind for SaaS vendors in terms of their growth because they're booking less revenue from the same customer as a result of that. And the third thing is, is the buyers are being more discerning in their software. They're looking to control it a lot more than they did. So in the heady times of 2020, 2021, all SaaS was good SaaS, let people go crazy, buy what they want. Money was fast, free and loose, both for companies to raise and for them to spend it. And now there's more focus by buyers on what value are we getting for that software or do we hope to get it? And they're churning from products much faster than they ever did. And we see this in one particular way in our data. We run what we call the SaaS momentum index, which very simply looks at on an individual company level, their spend on software this month versus last month.