Increased growth and decreased churn rates suggest continued enthusiasm for recurring digital services
Zuora, Inc. (NYSE: ZUO), the leading cloud-based subscription management platform provider, today released the latest Subscription Economy Index™ (SEI) report, which found subscription businesses in the index have outpaced S&P 500 growth rates by 4.6x over the past decade.
Companies and consumers alike subscribed to ongoing digital services, including consumption-based business models, at increased rates during 2020 stay-at-home orders. Zuora’s latest report shows that these behaviors continued throughout 2021. Even as the economy began to recover, SEI companies exceeded growth rates compared to the S&P 500. Churn rates (a metric that can measure the health of subscription businesses) have also decreased, suggesting that businesses are keeping their pandemic subscribers and that behavioral changes could be permanent.
In the latest SEI report, The Subscribed Institute at Zuora® found:
- Subscription-based businesses continue on a positive growth trajectory, headed toward pre-pandemic growth rates: Subscription businesses in the SEI experienced faster growth rates compared to the S&P 500 in 2021, with 16.2% and 12% revenue growth, respectively. Recent quarterly revenue growth (2020-2021) for SEI companies suggests growth could soon return to pre-pandemic levels.
- Decreasing churn rates support that consumers and businesses are maintaining subscriptions after 2020 spikes: Churn significantly dropped in 2021 for SEI companies, with a 14% improvement.
- Software as a Service (SaaS) remains the fastest-growing sector in the index: SaaS companies in the SEI report achieved 16.2% growth in 2021 with a 19.4% compound annual growth rate (CAGR) over the last four years (2018-2021). This growth gap is widening compared to all other SEI sectors, likely attributed to SaaS’ early subscription adoption and therefore more refined offerings.
- SEI companies experienced double-digit growth annually over the last four years across all sectors: Each sector in the latest report has seen a double-digit 4-year CAGR (2018-2021). The SEI experienced a 17.5% 10-year CAGR overall.
“While pandemic lifestyle changes accelerated subscription adoption, the latest SEI report makes it clear that subscribers continue to seek out these valuable digital services,” said Amy Konary, Founder and Vice President of The Subscribed Institute at Zuora. “Businesses can best harness this opportunity to deliver and monetize long-term customer value with flexible, customized subscriber experiences.”
The SEI report also analyzed the impact of businesses with subscription revenue by sector, covering businesses in SaaS, Media, Manufacturing, Internet of Things (IoT), Business Services, and Communications/Video Conferencing, as well as by region (EMEA and APAC).
The Subscription Economy Index report is available for download here.
About Zuora, Inc.
Zuora provides the leading cloud-based subscription management platform that functions as a system of record for subscription businesses across all industries. Powering the Subscription Economy®, the Zuora platform was architected specifically for dynamic, recurring subscription business models and acts as an intelligent subscription management hub that automates and orchestrates the entire subscription order-to-revenue process across billing, collections and revenue recognition. Zuora serves more than 1,000 companies around the world, including Box, Ford, Penske Media Corporation, Schneider Electric, Siemens, Xplornet and Zoom. Headquartered in Silicon Valley, Zuora also operates offices around the world in the U.S., EMEA and APAC. To learn more about the Zuora platform, please visit www.zuora.com.
© 2022 Zuora, Inc. All Rights Reserved. Zuora, Subscribed, Subscription Economy, Powering the Subscription Economy, and Subscription Economy Index are trademarks or registered trademarks of Zuora, Inc. Third party trademarks mentioned above are owned by their respective companies.
Forward-Looking Statements
This press release 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 subscription-based companies (including companies in the SEI report) and non-subscription 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. Zuora believes these third party reports to be reputable, but has not independently verified the underlying data sources, methodologies, or assumptions. Information that is based on estimates, forecasts, projections, market research, or similar methodologies is inherently subject to uncertainties and may differ materially from actual events or circumstances.
SOURCE: ZUORA FINANCIAL
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