Aotearoa New Zealand’s SaaS Sector: 2024 Insights from the Cloud

New report finds SaaS sector earned $3.6b revenue in 2023, growing two and a half times faster than NZ’s export sector overall

The new kiwiSaaS report, 2024 Insights from the Cloud, highlights that New Zealand’s Software-as-a-Service (SaaS) sector has earned $3.6b in 2023 revenue. It has been growing by a 15 percent compound annual growth rate (CAGR) since 2016, and at this rate it is on track to earn $9.7b by 2030.  

By 2030 the report estimates that SaaS export-led added value will be growing faster and contributing more nominal GDP ($4.5b) than New Zealand’s top three primary sector industries (horticulture, dairy product manufacturing and meat product manufacturing).

kiwiSaaS, a government and private sector initiative, has found that since 2016 SaaS exports have been growing at an inflation adjusted rate of 8.7 percent.

This is two and a half times higher than the inflation adjusted CAGR of 3.4 percent that New Zealand’s overall export economy has recorded in the past two decades.  

Bruce Jarvis, Head of kiwiSaaS, says that the SaaS sector remains an ‘invisible giant.’  “How much the SaaS sector contributes to our economic wealth today, and could do in the future, is only just becoming visible,” says Jarvis.

By the numbers: 90 percent of New Zealand SaaS companies are SMEs that are scaling up.

The 2024 Insights from the Cloud report analysed 743 revenue-earning SaaS businesses across New Zealand.  

Of the companies measured in the report, the top 75 (10 percent) sit in a ‘high-growth’ category of companies earning more than $10m in annual recurring revenue (ARR). Companies in this category generate a highly productive $305,296 average revenue per full time employee.

This high-growth group which includes companies such as Xero, Pushpay, Seequent and Serko, have grown revenues at a CAGR of 18 percent since 2016 and is responsible for almost 70 percent of the sector’s overall revenue.  

The remaining 688 (90 percent) SaaS companies are SMEs earning less than $10m ARR per year. These companies are in scale up-mode and only seven per year on average grow to the point where they exceed $10m in revenue.  

“Doubling or tripling the number of scale up SaaS companies moving into this ‘high growth’ group is how we create new economic wealth for New Zealand,” says Jarvis.

“This presents us with both a challenge and an opportunity. Few people have experience building a successful SaaS business from New Zealand,” continues Jarvis.  “Our scale up SMEs spread across the country all need the means to be able to connect and learn from those with this knowledge that only comes from lived experience. This is what kiwiSaaS was set up to achieve, and it now serves nearly 4,000 members working in the sector.”  

Hannah Ippolito, co-founder of SaaS business SquareKicker in Nelson agrees. She and husband Nick Ippolito launched and bootstrapped their business in October 2020, which now has 16,000 global users, 25,000 websites using their software, and employs 13 people.  

Their current product is growing at 40 percent per year, with a new product in the pipeline to launch in August, which is expected to triple their business.

“As first-time founders we have found the enormous opportunity of a SaaS sector goes hand in hand with some unique challenges. Having shared knowledge from New Zealanders who have previously forged this path has helped us avoid costly mistakes and accelerate our progress, to the point where we can be proud of the economic impact our company is able to provide,” says Ippolito.  

“The SaaS community has been incredibly generous with their time, and shared investment into helping us earlier stage companies grow,” she continues.  

kiwiSaaS members have invested almost 3,000 hours pro bono to help each other grow.

One person who knows the challenges of growing a successful SaaS business well, is Graham Grant, CEO of Seequent, a world leading geoscience software business based in Christchurch with estimated revenue of more than $240m.  

Grant is one of the experienced members of kiwiSaaS who has freely invested his time to help those aspiring to become as successful as Seequent.

“People working in SaaS are cutting a path in what is a relatively uncharted, new sector in New Zealand. There's no single playbook for success in SaaS - businesses need to learn from each other,” says Grant.  

“Sharing insights from successful global SaaS companies is crucial for new businesses. In SaaS, we're rarely competitors—our peers' successes benefit the entire sector. I wish we had this support when we started. Now, it's on us to help others and make New Zealand a global SaaS powerhouse,” says Grant.  

The Insights from the Cloud data analysis is based on provisional anonymised 2023 Stats New Zealand data for the 743 revenue-earning SaaS companies identified by kiwiSaaS in its customised data set.  

About kiwiSaaS: kiwiSaaS is a Government-funded body that was launched two years ago. It was established to help grow New Zealand’s Software-as-a-Service sector by enabling learning and knowledge exchange between its members. Government funding for kiwiSaaS ends on 30 June 2024 and it is currently being wound down.