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Anaplan’s Attrition Warning Signals Potential Retention Trouble
Monitor for retention and churn following software firm’s warning on existing customer attrition concerns.
December 3, 2021
Anaplan (PLAN), a seller of SaaS financial planning and forecasting software, derives much of its growth from existing customers who wind up using the platform more. Subscription revenue, which accounts for 90% of the company’s sales, increased 31% in the first nine months of the fiscal year. Eighty percent of the increase was driven by existing customers expanding their use of Anaplan’s platform.

Though the expansion is confirmation the platform has features existing customers desire, Anaplan issued an ominous warning suggesting its relationship with existing customers may not survive turnover of key contacts. In its latest 10-Q, Anaplan inserts new language suggesting sales may suffer due to the loss of key contacts at existing customers:

“Further, attrition of key personnel at our customers may impact our direct sales efforts.”

Though there’s always a risk incoming managers at existing customers will switch to software they’ve used elsewhere, SaaS professionals we spoke with say attrition is ordinarily a benefit. When managers using a product leave their current role, they often champion the product at their new company, resulting in new customers for the software provider.

Investors would be wise to focus on retention and churn in the coming quarters.
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