The new Subscription Economy Index covering fiscal 2020 is out, and needless to say, this latest edition is truly fascinating. What a year we’ve been through.
For those of you new to the study (which you can download here), the SEI report is based on anonymized, aggregated, system-generated activity on the Zuora Billing service, and provides a snapshot of the Subscription Economy as a whole. We track hundreds of anonymized companies across nine key verticals: saas, telecommunications, manufacturing, business services, IoT, media, publishing, healthcare and education.
So what does this year’s report tell us?
Well, the broader growth trend remains the same — the overall index has grown nearly 6X (more than 435%) over the last 9 years, and subscription businesses have consistently grown five to eight times faster than traditional businesses.
But the pandemic had a short-term effect. Last year SEI growth slowed in the first quarter, before returning to pretty much normal by the end of the year. And even during this slowdown, subscription businesses continued to outperform traditional companies by a wide margin.
In short, growth slowed, but we didn’t see any actual contraction, which is remarkable.
Overall in 2020, subscription businesses grew at a rate of 11.6%, while revenues of their product-based peers contracted to -1.6%. And in Q4, subscription companies in the SEI experienced revenue growth at a rate of 21%, seven times faster than S&P 500 companies’ growth rate of 3%.