Christina Villa (CEO & Co-Founder, Cledara) presents findings from Cledara’s dataset (~250,000 SaaS purchase and renewal datapoints from 1,000+ customers across the US and Europe). Key takeaways: companies generally increase SaaS spend month-over-month; Cledara’s SaaS index correlates strongly with the NASDAQ 100 (rising market → easier software sales); SMBs are more sensitive to market downturns while larger customers are steadier; churn showed waves (US led initial cuts, Europe later) but Q3 data indicates churn easing; customers increasingly prefer annual contracts.
To the stage, christina villa, CEO and co founder at cladera.
Okay, so hopefully you can all hear me so well. I'm. Yes. Lucy Navila, Founder and CEO of Cladara. What do we do at Cladara? So we help companies like yours discover, buy, manage and cancel all the different software subscriptions that you use to run and scale your business. And what we have done for this session is stated take almost a quarter of a million Data points on SaaS purchases and renewals from 1,000 plus customers across the US and Europe. And this is a part of the data that we hold at Klara because we are the company that holds the largest data set in the world on SaaS purchases, usage, renewal and churn. So what I'm gonna do here now is share some of those insights that we've learned from the analysis. So lots of lines going everywhere. But basically what this is is the Cladata SaaTS index. And what the Cladata SaaS index is telling us is our company's increasing SaaS spend from one month to the next or decreasing SaaS spend. And what we see in this chart here is that almost always we are above the 100 line. And what this means is that companies are always spending more on SaaS. It's only in January 2023 and January 2022 that we see the line dropping below the 100 mark. And this is telling us around those two months companies spend on average less on SaaS in the previous month. The other thing that we've done here is we've looked at the six month rolling average of this index and then we've looked at it in relationship to the NASDAQ 100. And the correlation that we see is incredible. Right? So what we can see is that when the NASDAQ is going up, it's actually companies are buying more software, which means that obviously it's easier to sell software when the NASDAQ is going down. What we see is that it gets harder to sell software. So if you want to know what's going to happen in the, you know, whether it's going to be harder for your sales teams to sell software, you can either sign up for the Cladara newsletter and get obviously these reports on a quarterly basis, or you can simply track the nasdaq. Is it going up? It's getting easier. Is it going down? It's getting harder. When we were preparing this presentation, we didn't have data for Q3 yet, but now we do have a lot of the Q3 data. And what we can tell you is that the lines are actually going back up. So it is getting easier again to sell software. The other thing here to look into is that who you sell also matters. Here we've separated SMBs from the rest of companies and what we can see is when the markets are good, when the markets are going up, selling to SMBs is great. They buy a lot of software and they buy it very quickly. But when the markets turn, then obviously those smaller companies are much more sensible, sensitive, sorry to, to those market conditions. And therefore, if you are selling to bigger companies, what you see is that everything is a little bit more stable. And again, if we look here towards the end of the chart now, we do have more Data on this Q3 and what's happening is that the green line, which is the one that looks at the small companies or companies selling to small companies, that's already crossed the blue line again, which means that for those companies selling to SMBs, it is getting easier again. So that's for sales teams, right? So if you're selling software, you make sure that, you know, track the nasdaq. If it's going up, your sales team has no excuse. They need to be selling and they need to be selling well. What happens with customer success? We also have an index to track. Check churn. And what we look in this charts chart, similar to the previous one, anything above 100 means that companies are churning more versus the previous month. Anything below 100 means that companies are churning less. And by the way, here the dates rather than 2021, 2022 is actually 2022 to 2023. So when the market stops, last year, US buyers, US companies were the fastest to react. And that's why we split it, because we see different behaviors. Right? So the green light in this case is us and the blue light, blue line is Europe. So the US buyers, they cut spend much faster and deeper than European buyers. That as we see, is a very flat line. So they didn't really react. But then what happened on the second on this year is that we see churn like another wave of churn happening and Europe is consistently cutting more and deeper than European customers, than US customers. Now, looking again at Q3 data, this wave of churn is kind of coming to an end. So we see the lines starting to flatten and go down. And what this is also telling us is that first of all, for customer success teams, it's going to get easier. So they will not see as much churn as they've been seeing these days. But also what it's telling us is that there is some sort of cyclicality on how companies churn for products. And usually they tend to churn from products towards the end of Q2 and beginning of Q3. So you can get your success teams ready to make sure that they try to prevent that churn that happens during that period of the year and try to understand why customers are churning from your product at that time. So here, basically what we are saying is that for anyone in this room selling SaaS, it's great because companies always increase SaaS spending. It doesn't matter where the market is, but they are always increasing. And here, similar to the churn graph, we have the green line for us, the blue one for Europe. And again, Europe was a little bit slower to react to the market conditions. And what we see is that last year they were still increasing a lot. On Saspan was your US customers were a little bit more conservative. And now after some period of volatility, the US customers are increasing that suspense still while we see how European customers are very much plateaued. So if you sell onto both markets, you will see those differences happening. Like something that was easier in Europe last year or relatively easier now, you'll find it a little bit harder compared to your teams in the US and there is always room for more software. So it's not only that companies increase in spend, but actually they always bring more applications into the business irrespective of market cycles. And you know what we saw earlier? Always more budget needed for your tools. Always more tools. This is almost like a nightmare for finance and it that they just need to constantly be revisiting those, those budgets and tracking all those products that keep coming to into the, into the company. But the good news for those two teams is that there is a tendency now where companies buying software actually prefer to buy on annual contracts more than ever. So even though we are still bringing a lot of it, companies want to lock in those prices. They want to have a little bit more stability on the software stacks that they have. And therefore that is good news for our friends in finance and it. And yes, so this is some of the very quick things that I wanted to share today. We don't have a lot of time for this. So just key takeaways that I will just quickly recap. Companies are still buying and increasing on software, even though it's been a little bit slower, but it always goes up. If you want to know whether it's going to get easier or harder to sell, track the nasdaq. Honestly, the correlation is incredible. Big companies during bad market conditions outperform small companies massively. We are at the moment exiting this next heat of churn that we've been seeing during the first six months of the year so it is getting easier for our teams to manage our portfolio of companies. Always more products coming coming into the business. US buyers of software they are a very good leading indicator for what's going to be happening in Europe in a few months time. So keep an eye on that especially again if you have customer base that is distributed across the two geographies and then annual contracts are more popular than ever. So if you were thinking of moving to annual contracts from those monthly contracts that your customers may be buying today now is the time to test it because the market is asking space. So thank you very much for your attention and if you want to learn more either come to our booth in the other hall or have a conversation with any of the people with the Cladara logo on the T shirt. Thank you very much.
