SaaS Recession OVER? Market Recovery NOW!

Name: SaaS Recession OVER? Market Recovery NOW!
Uploaded: 2025-01-01T13:07:39+00:00
Duration: 45 s
Channel: Jason M. Lemkin
Description: In this brief conversation, the speakers discuss the recent SaaS market downturn, labeling it a "SaaS recession" that likely concluded in the third…

1 Jan 2025 · 1 min

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In this brief conversation, the speakers discuss the recent SaaS market downturn, labeling it a "SaaS recession" that likely concluded in the third quarter of 2024. They reference internal dashboards (Sequoia, HubSpot) that show a sharp decline followed by a rebound, describing the pattern as a sine‑wave of market pressure. The downturn was driven by over‑buying of SaaS solutions, excess hiring, and high downgrade rates, which together suppressed growth‑retention metrics. By Q4 2024 the market appears to be stabilizing, with lower downgrade volumes and improving retention, suggesting the recession has ended and the sector is moving into a healthier phase.

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SaaS was in a downturn. There was a SaaS recession. Yeah. And it start— I don't know when it started, but I think it ended in Q3. If you look at the SaaS companies' numbers, see it through Sequoia, see it through all my HubSpot dashboards where I see our customers, it felt like we came out of the recession in Q3 of 2024. And I also just think it's like the universe like slammed SaaS down and then splashed it way up. And then slammed it down again. Yeah. And it's flashing back up and it's like the sine wave that's working through. And I think the size of the sine wave will get down over time, but I think we're in a different place in Q4 of this year than we were Q4 of last year economically. So people overbought, people had too many employees.
Yeah.
And the downgrades were high. The growth retention for people were low. And I think we're just getting back into a better spot.
That's what I think. It wasn't, they're just, one of the frustrating things, there's so many people like ZIRP, it's interest rates. I think people just bought too much during a generational pandemic. They bought too much software and so they dialed it back maybe too much because that's what we do and we're through that, right? We're through the overbuying cycle for the most part. I think it's that simple, isn't it? I think it's that simple. Yeah. And we're seeing it.