Consumer Subscription Software 2024 – Enhancing Everyday Life.

Eric Crowley, Partner at GP Bullhound, commented: We continue to be excited watching entrepreneurs build world class companies in the CSS space. The market opportunity and TAM continues to grow as new companies and products are delighting passionate consumers.”

Market update and trends to watch

• The Digital Markets Act opens up new opportunities for developers.The Digital Markets Act forces Apple to ease control over developers, leading to external payments and independent app stores, while new payment options grow.
• Netflix’s password lockdown – the new normal. Netflix’s password-sharing crackdown limits access to a primary location, pushing other streaming services to follow suit and convert non-paying users.
• The screen time crackdown on CSS. Screen time regulations, initially targeting gaming and social media, are expected to impact CSS, pushing entrepreneurs to create platforms that engage users without requiring constant attention and to adjust their engagement strategies accordingly.
• Public CSS valuations have rebounded over the last two years. Public CSS companies have seen their forward revenue multiples rebound from 5.4x to 6.9x between 2022 and 2024, according to the GP Bullhound CSS Index. 
• Averages are evil. CSS companies with strong growth and profitability can command revenue multiples of 6x or higher, while slower-growing companies are trading at 2-4x. 
• Public investors reward businesses that manage to exceed the Rule of 40. Public investors reward CSS companies that exceed the Rule of 40 with EV/revenue multiples of up to 10x, outperforming peers that fail to meet this metric.

Expert views from company builders

• CSS flywheel attributes to drive premium valuation. Investors highly value CSS apps with winner-takes-all potential, driven by network effects, and entrepreneurs must clearly define their competitive positioning and market niche to attract investment.
• Introducing the newest C-Suite position – Chief Household Officer. The Chief Household Officer (CHO) role has gained prominence as CSS apps have evolved from entertainment platforms like Netflix and Spotify into comprehensive tools for managing daily life, including finances and activities, with CHOs relying heavily on various subscription apps.
• CSS Forecasting – Crafting the blueprint for mathematical certainty. Top CSS companies leverage positive net revenue retention (NRR)  to predict long-term revenue, with “locals” renewing at nearly 100%  after two to three years. 
• NRR is not just a SaaS term. Leading CSS companies have found ways to improve net revenue retention (NRR)  through upsells, win-back strategies, and price increases, driving long-term value. 
• How do you measure up? Metrics like free trial to subscription conversion and 1st-year retention rates are critical for CSS companies, with top performers achieving conversion rates of up to 56%. 
• Maslow’s hierarchy of subscription – why do people subscribe. CSS businesses thrive by aligning with consumers’ deeper needs, with 70% of U.S. GDP is linked to consumer spending in categories such as safety, community, and identity. 
• Not every CSS exit is an IPO.  Only 1.69%  of venture-backed consumer companies that raised Series B since 2010 have gone public, highlighting the importance of alternative exit options like private equity. 

• Dmitry Furman – CEO, Welltech
• Eric Dunn – CEO, Quicken
• Michael Segal – CEO, Skylight
• Christina Schrettle – Director, Verdane
• Bruno Cremel – General Partner, Partech
• Pranav Singhvi – Managing Director, General Catalyst
• Agata Reyes – Partner, True Search 
• Jimmy Fitzgerald – CEO, Paddle

Along with an overview of the current CSS ecosystem, key CSS metrics to watch, and much more.

Enquiries
For enquiries, please contact:
Eric Crowley, Partner, at eric.crowley@gpbullhound.com

About GP Bullhound
GP Bullhound is a leading technology advisory and investment firm, providing transaction advice and capital to the world’s best entrepreneurs and founders. Founded in 1999 in London and Menlo Park, the firm today has 12 offices spanning Europe and the US.