Introduction

B2B and B2C SaaS struggled in Q1 2025. Sales were steady, but churn and economic worries kept growth low for both markets.

What's the problem it solves?

This report shows why SaaS companies saw slow or no growth in early 2025, despite decent new sales. It reveals that high churn, market shifts, and changes in how users try and drop AI tools are weakening revenue. The article offers ideas for how SaaS leaders can respond.

Quick Summary

In the first quarter of 2025, both business and consumer SaaS markets failed to bounce back after the usual holiday slowdown. Sales were not the problem -many companies still signed up new customers, and even saw growth in upgrades. But a big rise in churn (people canceling or downgrading) made it impossible to grow revenue. For B2B especially, it was the first time ever that post-holiday revenue didn't return to normal.

This increase in churn started even before Q1, hinting at a deeper trend. Many companies are rethinking their tools, trying out AI products, and facing pressure from a weaker global economy. On the consumer side, people are testing lots of new AI apps, then quickly stopping or switching. The article closes with practical steps SaaS teams can take to deal with all this change -including testing pricing, fixing churn, and planning better ways to use AI without hurting profits.

Key Takeaways from the article

• B2B SaaS didn’t recover after the holidays -revenue stayed lower than expected
• Sales stayed strong, but churn rose sharply, canceling growth
• Churn has been rising since late 2024, likely from economic stress and new AI habits
• Consumer SaaS also slowed, with users trying AI tools and then quickly leaving
• Revenue growth in both markets is being blocked more by churn than by lack of sales
• AI tools are adding new costs and forcing changes in pricing models
• To adapt, companies should test billing, try cardless trials, and use hybrid pricing
• Usage-based pricing works better for AI than seat-based models
• Separating trial use from heavy use helps protect margins
• Checkout recovery emails and flexible payment systems can help with growth and retention

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