Australian subscription companies booming, says new report

The leading cloud-based subscription management platform provider has released its Subscription Economy Index™, revealing that Australian subscription companies experienced revenue growth of 13.7 per cent in 2021. 

The benchmarking study, measuring the collective health of subscription businesses around the world, found that in the last decade subscription businesses in the index had grown 4.6 times faster than those in the S&P 500. 

Zuora’s Nick Cherrier, the APAC Chair of the company’s Subscribed Institute, said that despite the tumultuous two and a half years, subscription businesses in the region have shown remarkable steadiness in comparison to their product-based counterparts.

“We saw certain subscription businesses - streaming, video conferencing and retail services, for example - generally prospered during the first part of the pandemic. What the SEI shows us is that there’s been a boom, but no bust. The vast majority of enterprises using a subscription model have demonstrated great resilience.

“That’s a global trend, and the APAC region was a standout in this regard - the Subscription Economy Index in APAC has grown by 132% over the last five years. That’s three times faster than HKEX Sales, and more than five times faster than JPX and ASX Sales. If you look at just the last three years, the majority of them dominated by COVID, the performance of subscription businesses in APAC is even more impressive. APAC SEI grew at an average of 18.6% per annum, over 6 times faster than the ASX and over 13 times faster than the JPX.”

The report also found that average churn levels globally, which had remained steady at just above 6 percent between 2018 and 2020 dropped significantly in 2021. The 5.4 percent figure for the year was a 14 percent improvement compared with 2020. 

“Many factors influence churn rate, but we know that this drop comes in part from companies’ ever-greater emphasis on improving customer journeys and service levels. 

“SEI companies have not moved away from the idea that the subscriber must be their central focus. The reduced churn rate shows that they have further fine tuned their understanding of customer needs and made their services even more desirable in the long term.” 

Cherrier said that the Subscription Index’s positive results were reflected in the performance of Zuora in the APAC region.

“More and more Australian businesses are seeing subscriptions as a strategic part of their business growth. They realise that it generates more dependable revenue, and many of them are calling on Zuora to make sure they get their model right.”

The SEI report also analysed the impact of businesses by sector, covering Software as a Service, Media, Manufacturing, Internet of Things, Business Services and Communications/Video Conferencing.

Contact Cameron, The Ink Bureau 0408 662 007