Innovation
UK SaaS Survey: Will this year really see a ‘SaaSpocalyse’?
- Innovation
- Report
- 5 minutes read
Data from a subset of 50 enterprise software companies, tracked between 2023 and 2025, reveals that UK SaaS is at an inflection point – but suggests that the so-called “SaaSpocalypse” is unlikely. While YoY ARR growth softened in 2025, retention and gross margins showcase the robustness of SaaS as a sector. Commercial performance remains solid, and our data suggests software businesses are taking deliberate measures to boost cash and guard against future volatility. The verdict? Despite the headlines, the reports of software’s demise are greatly exaggerated.
- In 2025, ARR growth in our dataset of enterprise software companies declined slightly from the previous year, down to 22% from a median growth rate of 29% in 2024.
- Worries that customers will ‘abandon ship’ and desert enterprise software companies for AI-native solutions have thus far been unfounded. The median across our dataset reflects the opposite; there was lower churn in 2025 (13%) vs that in 2023 (16%).
- In 2025, enterprise software companies focused in on capital efficiency. The mean burn multiple – expressed as a ratio weighing cash burn against net new ARR – reduced from 1.9x in 2024 down to an average of 1.1x last year.
- This report provides benchmarks for SaaS companies around growth, retention, and efficiency.
Will this year really be a ‘SaaSpocalyse’ for enterprise software?
It’s a question that many across the innovation economy have asked, particularly given that almost $1 trillion was wiped from software and services stocks in the first quarter of 2026.
It’s clear that SaaS is at an inflection point – but what might the future look like?
We have analysed a subset of 50 enterprise software companies, tracked between 2023 and 2025, across key verticals like Cybersecurity, Compliance, & Governance, AI, Data & Analytics, Applications and Software Infrastructure to develop an objective understanding of the road ahead for enterprise software companies.
Testing SaaS stability: Measuring ARR growth, retention, and cost efficiency
Our analysis measured 3 key factors:
- ARR Growth
- Customer retention
- Cost efficiency
The results are telling.
Although average top line growth was softer in 2025 compared to the previous year as companies aggressively lean their cost base, top performers from our dataset showed continued resilience and agility. In fact, companies in the top quartile are growing ARR by 38% in 2025.
Companies measured also demonstrated a clear focus on efficiency. Again, the data suggests efforts have largely been successful. The mean burn multiple (a ratio weighing cash burn against net new ARR) dropped from 1.9x in 2024 to an average of 1.1x last year. That means rather than spending £1.90 of cash to make each £1 of new revenue, the median company only had to spend £1.10.
Sydney Macgregor, Interim Head of Enterprise Software, HSBC Innovation Banking UK"For companies that aren't an AI rocket ship, cost optimisation remains crucial. By right-sizing cost bases and focusing on unit economics, these companies are ensuring capital efficient growth and line of sight to profitability."
Retention data is also positive. Concerns customers would abandon ship have thus far been unfounded, with lower churn in 2025 (13%) than in 2023 (16%) – suggesting efforts to deepen relationships with existing customers has had a positive impact.
Further disruption is inevitable, but these are promising signs that reinforce how robust SaaS as a sector has been.
Glen Waters, Head of Tech and Life Sciences, HSBC Innovation Banking UK"The jury is out whether today’s leaders have established a durable advantage – one that will accelerate further into 2026 and beyond – or whether the speed of change will continue to test the competitive landscape, exposing even established players to disruption."
Any opinions expressed are merely opinions and not facts. All information in this document is for general informational purposes and not to be construed as professional advice or to create a professional relationship and the information is not intended as a substitute for professional advice. Nothing in this document takes into account your company’s individual circumstances. HSBC Innovation Banking does not make any representations or warranties with respect to the accuracy, applicability, fitness or completeness of this document and the material may not reflect the most current legal or regulatory developments. HSBC Innovation Banking disclaims all liability in respect to actions taken or not taken based on any or all of the contents in this document to the fullest extent permitted by law. Nothing relating to this material should be construed as a solicitation or offer, or recommendation, to acquire or dispose of any investment or to engage in any other transaction.
