New data reveals that net retention at software companies has been cut in half in recent quarters, contributing to the slowdown in revenue growth in the tech industry. Net retention, which measures the spending of existing software customers, is a key factor in the SaaS economic model. The decline in net retention makes it difficult for software companies to reduce losses and simultaneously expand. Recent statistics show that median net retention at public SaaS firms has decreased from 120% to 111% in just two quarters. This decline raises concerns about the viability of the SaaS business model.
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