Q2 SaaS Earnings: Growth, Efficiency, and Who’s Winning the Game

We’re right in the thick of Q2 earnings season, and the numbers coming out of public SaaS companies are telling an interesting story. From breakout performers like AppLovin to more mature names like HubSpot and Atlassian, the trends in growth, efficiency, and operational discipline are clear: scaling in 2025 is all about balance.

Here’s a closer look at some of the most notable stories from this quarter.

AppLovin: A Masterclass in Growth and Efficiency

If you want a company that looks almost “too good to be true,” start with AppLovin.

This quarter, AppLovin posted:

• 77% revenue growth

• 126% free cash flow

• 88% gross margins

• 76% operating margins

All while spending only 4% of revenue on sales and marketing, 3% on R&D, and 4% on G&A. In other words, they’re growing fast and extremely efficiently.

They also divested their mobile apps business for ~$900M, allowing them to double down on their high-growth advertising network. This focused strategy, combined with impressive operational execution, makes them a company to watch.

Appian: Growth Needs a Boost

Appian had a more modest quarter:

• ARR growth: 17% (net new ARR of $79M)

• CAC payback: 40 months

• Operating margin: –6%, up from –27% last year

• Free cash flow: 27.6%

Operational improvements are clear, but at $500M ARR, Appian needs to accelerate growth to keep pace with peers like HubSpot and Monday.com, which are cruising past 50–60% growth.

HubSpot: Adding Customers at Scale

HubSpot continues to impress with net new customer growth:

• 9,724 new customers in Q2

• ~40,000 over the past 12 months

• Net new ARR: $483M (19% growth)

ARR growth is slightly up from the previous quarter, showing a glimmer of recovery after a downward trend. Efficiency metrics are solid: CAC payback of 25 months, magic number of 0.56, and ARR per employee at $341k. HubSpot trades at 8× Q2 ARR - not cheap, but reflective of strong growth at scale.

Atlassian: Big Numbers, Slowing Pace

Atlassian’s growth machine might be losing a bit of steam:

• ARR growth: 23% (down from 55% in Q2 2022)

• CAC payback: 16 months

• Free cash flow margin: 26%

• Operating margin: –2%

At $5B+ ARR, sustaining rapid growth becomes naturally harder. Even so, Atlassian is still producing solid results, though efficiency metrics indicate scaling challenges.

Klaviyo: Stabilized Growth

Klaviyo has found a floor around 30% ARR growth after several quarters of fluctuation:

• Net new ARR: $283M

• CAC payback: 24 months

• Net revenue retention: 108%

• Free cash flow margin: 20%

ARR per employee is now $481k, and their market cap sits at $9.7B (~8× Q2 ARR). Steady growth and strong retention make them a solid performer at this scale.

Semrush: Efficiency Under Pressure

For smaller SaaS companies like Semrush, go-to-market efficiency remains a challenge:

• ARR growth: 20%

• CAC payback: 40 months

• Rule of 40: 17

• ARR per employee: $279k

They’ll need to improve sales and marketing efficiency to scale beyond their current $500M ARR level.

Datadog: The Gold Standard of Consistency

Finally, Datadog continues to demonstrate what sustained SaaS growth looks like:

• ARR growth: 28%, adding $726M in net new ARR

• CAC payback: 16 months

• Free cash flow margin: 20%

• Net revenue retention: 120%

• ARR per employee: $480k

Even at $3B ARR, maintaining 25–30% growth is a remarkable achievement. With a market cap of $45B (~14× Q2 ARR), Datadog continues to set the benchmark for large-scale SaaS efficiency.

Key Takeaways from Q2

This quarter reinforces a few important lessons for SaaS companies in 2025:

1. Efficiency scales: AppLovin and Datadog show that operational discipline can coexist with rapid growth.

2. Growth slows with size: Atlassian, Appian, and HubSpot remind us that ARR growth naturally decelerates as companies scale.

3. Market perception matters: Valuations don’t always align with fundamentals - investor attention, capital allocation, and sentiment play a huge role.

Q2 earnings show that the SaaS landscape is as competitive as ever. The winners will be the companies that can balance growth, efficiency, and capital allocation - while keeping their stories compelling for both customers and investors.

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