Subscription businesses saw a 12% revenue growth in 2022, with media and publishing experiencing a 4.6% growth during that time, according to Zuora’s recently released Subscription Economy Index report.
“Over the past 11 years,” the report says, “subscription-based companies in the SEI have grown 3.7x faster than the companies in the S&P 500, which have historically represented more traditional, product-based businesses. Specifically, the compound annual growth rate (CAGR) for SEI companies was 17%, compared to 4.6% for the S&P 500 over the same period.”
The report found that average quarterly churn rates were consistent with pre-pandemic rates — 6.4% in 2022 compared to 6.1% in 2018 — and subscriber acquisition growth continued.
“While quarterly growth rates over the past 12 quarters have fluctuated,” the report says, “the trendline shows that companies acquired new subscribers at a higher rate in 2022 than what was observed in 2020 and 2021.”
In terms of stability, Zuora’s think tank estimates that existing customers could make up 70% to 80% of a subscription-based business’ annual recurring revenue.
“It is crucial for businesses to develop thoughtful strategies for maintaining and expanding relationships with current customers and to allocate appropriate resources to achieve this.”