This quarter’s flash report shows more of the same from last quarter, and the forecast indicates a steady finish for the year. This is good news! The return to growth paired with ongoing gains in operating efficiency is holding, showing that the “year of efficiency” has given way to an era of sustainable growth. This is a marked difference from the hypergrowth and hyperburn era, but if companies can continue to compound away and march towards convergence, they can become great companies. At this point, we can’t say if this era will continue into 2025 and beyond, but for now, this is a welcome shift toward stability.
Here are the top line metrics you need to know:
- Companies grew faster. ARR growth rate rose from 24% to 31%.
- Companies became more efficient. Burn multiple improved by 23%, meaning companies burned $1.92 (down from $2.49) for every $1 in net new ARR generated.
- Companies burned less. Operating margin rose from (76%) to (67%).
Growth continues slow re-acceleration 
Growth continues to steadily reaccelerate. The uptick in ARR growth seen in Q224 continues with a 700 basis point increase quarter-over-quarter. Companies are optimistic this momentum will hold, with median growth rates set to modestly exceed 2023. Growth in the top quartile and top decile this quarter was messier. Top quartile and decile growth softened slightly from last quarter but remains strong, showing some of the highest figures this year, second only to Q2 2024. For annual forecasts, the top quartile is on track for 84% ARR growth, while the top decile is projected to reach 237%—both comfortably above last year’s rates.
Burn multiple improves for the fourth straight quarter
The “year of efficiency” has evolved into an “era of efficiency,” with a solid 23% improvement in median burn multiple—the fourth consecutive quarter of gains. As a refresher, burn multiple measures net cash burn relative to net new ARR, where a lower number indicates better cash efficiency, crucial for extending runway. The top quartile posted a 9% improvement, and the top decile held steady for the second quarter in a row. Looking at the year-end outlook, median burn multiple sits at 2.2, marking a 41% improvement over last year. The improved performance in 2H24 is a boon for companies. With growth slowly accelerating and burn multiples improving, startups are proving they can achieve more with less.
Operating margins sees continued improvement
Operating margin continues to strengthen across the board, extending the trend that began in 2022. The key shift? Margin improvements are now coupled with a gradual reacceleration in growth. With one quarter left in 2024, companies plan to stick with this efficient model, aiming for moderate growth acceleration. If companies can sustain steady growth and controlled burn multiples, they may not achieve explosive results, but they will be on track for solid outcomes. We’ll share early insight into how companies are approaching this balance when we release our 2025 whisper numbers.
Our flash reports use real data from a representative sample of enterprise software startups and public companies to help founders contextualize their own numbers with their peers and within the larger economic climate. The numbers from this report are early returns so we do expect some shifts over time as we get additional data points. Check out our Q2 update and our Scale Studio tools to benchmark your most important operating metrics.
