This is all true, but it misses a broader point. We’ve actually been studying this topic, and wrote it up in our COVID Impact report at https://www.zuora.com/guides/subscription-impact-report-covid-19-edition/. Note this didn’t cover just SaaS companies, but all kinds of subscription services.
There are two things that should be considered:
(1) No matter how you slice it, recurring revenue is more resilient than non-recurring revenue. For companies that start every quarter at zero, that have to sell units to make up every dollar, these companies revenues can literally drop to zero when demand dries up. Subscription businesses, on the other hand are driven by renewals. The probability that all of your customers cancel overnight is highly unlikely. Running a subscription business is like starting a race at the finish line versus the starting line.
(2) Subscription businesses care about lifetime value, not short term payments. This gives them a lot more flexibility. In fact, subscription businesses have a built in incentive to help their customers out, if that means whether that customer survives or not. As an example, below are a few stories of subscription services that are working with their customers to overcome the current situation, services include Resy, and CarGurus.
