KeyBanc and Sapphire Ventures Report AI-Driven Growth in Private SaaS Sector

KeyBanc Capital Markets and Sapphire Ventures released their 16th annual Private Company SaaS Survey, announced in a press release, highlighting renewed growth and profitability across the software-as-a-service sector.

The report shows annual recurring revenue growth is expected to rise from 15% in 2024 to 20% in 2025, marking the first increase in three years. Gross retention is projected to approach 90%, while net retention remains above 100%. Profitability metrics also continue to improve, with EBITDA margins expected to reach profitability in 2026.

AI adoption was identified as a key driver of these gains. Over two-thirds of surveyed companies are already monetizing AI, primarily through subscription models, and more than half plan to increase AI spending by over 21%. Most organizations see new products and services as the main area of AI opportunity, while workforce reductions are viewed as less significant.

The study concludes that private SaaS companies are successfully balancing operational efficiency with growth, supported by disciplined AI investment and sustained profitability focus.