Zuora SEI Report: Flexible, Recurring Monetization Models Drive 3.4x Faster Growth Rates Than the S&P 500 Over the Past 12 Years
Zuora, Inc., a leading monetization suite for modern business, today released the latest Subscription Economy Index™(SEI) report, which found that companies in the SEI have experienced 3.4x faster growth rates than the S&P 500 over the past 12 years.
“Staying competitive means embracing agility and flexibility to incorporate a diverse mix of business models as opposed to a reliance on any single approach”
In 2023, amid economic challenges and slowed digital transformations, companies in the SEI demonstrated resilience through Total Monetization strategies. By aligning and evolving their monetization models with customer demand, they pursued innovative approaches beyond traditional subscriptions, including hybrid and flexible bundling strategies. This agility and customer focus have driven sustainable growth despite market uncertainties.
In the latest SEI report, The Subscribed Institute at Zuora® found:
- Companies in the SEI continue to outpace the S&P 500: In 2023, companies in the SEI experienced a 10.4% revenue growth rate on average compared to 6% for the S&P 500.
- Customer acquisition slowed, but retention is up: While customer acquisition slowed in 2023, companies in the SEI are retaining their customers, with churn numbers lower than the previous three years.
- Customer expansion, or annual revenue per account (ARPA), is on an upward trend and slightly improved in 2023: Starting with a quarterly growth rate of 0.73% in Q1 2023, ARPA growth ended the year over 2x stronger at 1.76% in Q4. The quarterly average also improved year-over-year, with 1.5% growth in 2023 compared to 1.29% in 2022.
- While growth rates slowed in the SaaS sector, churn is down and consumption-based models are continuing to demonstrate promising revenue growth: The SEI SaaS sector experienced a 10.1% revenue growth rate on average. The 6-year compound annual growth rate (CAGR) for SEI SaaS companies employing consumption-based models reached 20.1% in 2023 compared to 16.3% for the non-consumption counterparts.
- In the Media & Entertainment sector, the New Media subset experienced faster revenue growth, but Publishing Media successfully expanded subscriber count over time: Media & Entertainment experienced a revenue growth rate of 6% on average in 2023. While the New Media subset experienced a faster revenue growth rate (12%) than Publishing Media (5.6%), Publishing Media grew ARPA year-over-year (YoY), while New Media ARPA growth slowed.
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“Staying competitive means embracing agility and flexibility to incorporate a diverse mix of business models as opposed to a reliance on any single approach,” said Amy Konary, Senior Vice President and Founder of The Subscribed Institute at Zuora. “Companies that are able to evolve their monetization with demand will be better set up for faster and recurring growth.”
Zuora’s SEI report analyzes the growth and resilience of over 600 recurring revenue businesses based on anonymized, aggregated, system-generated activity on the Zuora Billing service. The latest report includes data by sector in SaaS, Media & Entertainment and Manufacturing, as well as by region in EMEA and APAC.
