Latest Report from the Maxio Institute Finds Pricing Model is a Key Lever for Revenue Acceleration

ATLANTA, GA / ACCESSWIRE / September 5, 2024 / Maxio, an industry-leading billing and financial operations platform for B2B companies, today announced the release of its second quarter "B2B Growth Report: Private Company Benchmarks & Analysis" from the Maxio Institute, the company's research and analytics group. The latest report, which presents data on the last 10 quarters from over 2,400 businesses, reveals that private B2B firms are growing despite challenging economic conditions. The average annualized revenue growth rate for all businesses was 17 percent in the second quarter, while smaller B2B companies overperformed to deliver 21 percent growth.

The B2B Growth Report highlights that businesses are affected by the same forces as consumers: high interest rates and cumulative inflation. Cost-cutting and cash conservation have become the mantra across finance departments to survive in a scarce funding environment. Yet the private B2B sector continues to grow. Companies are spending on infrastructure, such as logistics and supply chain technology, which experienced a 36 percent annualized growth rate in Q2. Other essentials like cybersecurity and healthcare are also booming this year, with 36 percent and 26 percent Q2 growth rates, respectively.

The average growth rate for private B2B companies since the beginning of 2022 is 17 percent, exactly equal to this quarter's result. That has significantly outpaced many public companies, with members of the S&P 500 averaging 6.9 percent revenue growth over the past five years and projecting only 5.5 percent growth in 2024.

Key findings of the report include:

• Small B2Bs Speed Up: Companies with less than $1 million in annual revenue have gained significant momentum since they hit a low point in late 2022, growing 26 percent in Q1 and 21 percent in Q2. These smaller startups are now outpacing the rest. Having found ways to grow despite significant headwinds, they may represent some of the most promising companies of the next decade. This trend was also observed following the 2008 financial crisis when industry leaders such as Asana, Square, Uber, and Venmo were founded.

• Pricing Model Matters: Fixed-rate pricing models outperformamong smaller businesses with revenue under $1 million. These firms benefit from the predictability of set contracts and grow at least twice as fast as their usage-based peers. Once companies hit $10 million in revenue, the trend is reversed, with those that embrace usage-based pricing growing nearly twice as fast as those that stick with a fixed-rate model.

• Unexpected AI Evolution: Revenue growth at B2B AI companies has slowed since its peak of 50 percent in Q122. In 2023 and 2024, they have grown at an average annualized rate of 21 percent, aligning more closely with overall B2B market trends. This slowdown may be partially due to the increasing capabilities of foundational AI models, like OpenAI and Anthropic, which make some smaller AI companies obsolete. Smaller AI companies are being forced to find their own niche or risk becoming only one feature in a larger model.

• Cybersecurity Remains Essential: Cybersecurity is the fastest-growing industry tracked over the past two years, with an average annual growth rate of 35 percent. Fueled by significant investments in 2021 and the ongoing need to combat rising ransomware and phishing scams, which are further intensified by AI-generated content, the prominent role of cybersecurity is expected to persist due to ongoing digitization and AI expansion.

The report analyzes anonymized billing data from more than 2,400 Maxio customers, nearly 60 percent of which are SaaS companies. It offers a comprehensive look at growth rates, pricing strategies, invoice characteristics, and industry trends. The data set represents approximately five percent of the global SaaS market, offering a new perspective on market performance beyond the often-highlighted 140 publicly traded B2B SaaS companies.

"The mixed signals in today's economy make it hard for companies to know if what they're experiencing is part of a broader trend or something specific to their business," said Jon Cochrane, Director of the Maxio Institute and VP of Strategy at Maxio. "Now that the funding environment has returned to earth, companies must embrace efficiency without sacrificing growth. We hope our latest report will help B2B companies gain a new perspective, see how they stack up against the broader market and achieve sustainable success."

For more insights, access the full report here.

About Maxio

Maxio empowers B2B companies to unlock their next stage of growth. Our billing and financial operations platform is designed to meet the unique challenges of B2B SaaS and recurring revenue businesses, including fixed-rate and usage-based billing, subscription management, revenue recognition, payment processing, metrics and analytics. Maxio, formerly Chargify and SaaSOptics, is backed by Battery Ventures and processes more than $16B in annual revenue for over 2,400 customers.

For more information, please visit https://www.maxio.com/.

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SOURCE: Maxio