SaaS growth has dropped from ~30% annually to the low teens. What does that actually mean for how your business gets valued now?

Something shifted in how SaaS businesses get valued, and it's not just about AI.

Growth rates for public SaaS companies have gone from around 30% per year in 2021-2022 down to low double digits now. That's not a blip. That's a structural reset.

And the metrics people used to wave around, ARR, Rule of 40, free cash flow, are getting harder scrutiny than they were three years ago.

A few things investors and auditors are actually looking at right now:

Retention quality over revenue headline. Gross revenue retention tells you if customers stay. Net revenue retention tells you if they're growing or shrinking their spend. If you can't answer both numbers confidently, the rest of the conversation is going to be uncomfortable.

Whether your cash flow is real. Stock-based compensation makes free cash flow look cleaner than it is. If you're using the Rule of 40 as a north star, make sure you're stress-testing it against what the business actually costs to run.

Goodwill assumptions. For anyone who bought software assets at 2021 multiples, auditors are now asking whether those balance sheet valuations still hold. If growth has slowed and AI is making some software easier to replicate, the answer might not be comfortable.

AI as a churn lever. This is the one that keeps coming up in renewal conversations. Customers are starting to argue, sometimes legitimately, sometimes as bluff, that they could build something similar themselves. For narrow tools with little differentiation, that threat has teeth.

None of this means SaaS is broken. Recurring revenue is still a genuinely valuable business model. But the "trust us, revenue is recurring" pitch that worked in 2021 doesn't land the same way anymore.

Curious what others are seeing on the ground. Are your renewal conversations getting harder? Are buyers or investors asking different questions than they were two years ago?

Full piece here: https://tax.thomsonreuters.com/news/saas-bubble-gets-a-reality-check-as-growth-slows-and-ai-turns-up-the-heat/