AI-NATIVE SOFTWARE COMPANIES LEAD ON GROWTH, BUT STRONGER ECONOMICS HAVE NOT YET FOLLOWED

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KeyCorp (NYSE: KEY) unit KeyBanc Capital Markets released its annual AI x Software Benchmark, examining AI adoption and private software company economics. Formerly the SaaS Survey, the benchmark is in its 17th year.

Companies selling AI as their primary product reported 34% median annual recurring revenue growth in 2025, versus 22% for companies embedding AI into broader products. Their median EBITDA margins were negative 12% and negative 1%, respectively. Across participants, AI-driven recurring revenue is projected to grow 128% in 2026, but represent only 12% of total annual recurring revenue. AI spending exceeded year-to-date budgets at 44% of respondents. While 92% reported shorter product development cycles, 57% said customers were building alternative products using AI coding tools. These findings describe surveyed software companies, not KeyCorp's operating results.

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11/13/2026 - 03:04 PM EST

17th annual benchmark from KeyBanc Capital Markets, formerly the SaaS Survey, expands to measure how AI is reshaping the private software industry

SAN FRANCISCO, Nov. 13, 2026 /PRNewswire/ -- KeyBanc Capital Markets Inc., the corporate and investment banking unit of KeyCorp (NYSE: KEY), today released results from its 17th annual AI x Software Benchmark, one of the longest-running benchmarks of financial and operating performance by software companies. Formerly known as the SaaS Survey, the benchmark has been expanded this year to examine how artificial intelligence (AI) is changing product strategy, monetization, unit economics, and operating models.

This year's findings show that companies selling AI as their primary product are growing significantly faster than their peers, but they also report weaker profitability and revenue productivity than software companies embedding AI into existing products. AI adoption is widespread; monetization and measurable financial impact remain early.

"For 17 years, this benchmark has given software operators and investors a clear view of how the industry is performing. This year, the central question is whether AI is creating a durable advantage," said Scott Peterson, Managing Director, Software Investment Banking at KeyBanc Capital Markets. " AI is accelerating growth and compressing development cycles, but AI spend is running ahead of budget and the economics are still catching up. 2026 is a proving year for AI-driven revenue."

"Developer headcount has historically been one of the biggest constraints for software development. AI coding tools are loosening that constraint as developer productivity improves," added Peterson. "But rather than let those gains drop to the bottom line, companies are reinvesting them to ship more product faster."

TOP TRENDS AND INSIGHTS:

AI-native companies lead on growth, while embedded AI leads on economics

Companies selling AI as their primary product reported median ARR growth of 34% in 2025, compared with 22% for companies embedding AI in broader products and 9% for companies still developing customer-facing AI.
Core AI product companies reported a median EBITDA margin of (12%) in 2025, compared with (1%) for embedded AI companies
Embedded AI companies also led on productivity, with ARR per FTE at $201K versus $117K for core AI product companies.
Companies that charge separately for AI products reported 27% median ARR growth in 2025, versus 17% for those that do not. That growth advantage has not yet translated into higher net retention.

AI revenue is small but poised to accelerate quickly

AI-driven ARR is projected to grow 128% in 2026, up from 74% in 2025, yet will still only represent 12% of total ARR.
Overall median ARR growth was 24% in 2025 and is projected at 23% in 2026, with participants planning for a broad-based acceleration to 40% in 2027.
Overall median EBITDA margin is expected to improve from (3%) in 2025 to 1% in 2026.

AI spend is outpacing budgets and showing up in margins before growth

More than four in 10 respondents (44%) report AI spend over budget year to date, and roughly a quarter (24%) are over by more than 20%. Higher-than-expected token usage was the most cited driver of variance.
Companies spending more than 5% of revenue on AI reported a median gross margin of 66% in 2025, compared with 78% for those spending less than 2%.

AI is speeding up product development, and workforce impact expected to broaden

92% of respondents report that AI is shortening product development cycles, and 91% deploy AI internally in engineering.
65% of participants report no AI-related headcount reduction or reallocation in 2025. Looking out 12 to 24 months, which falls to 34% with R&D (45%) and customer service (37%) the functions most likely to be affected.

Customers are building with AI, while autonomous agents remain early

57% of respondents say their customers are building alternative products with AI coding tools.
Only 20% offer fully autonomous agents to their customers.

The 2026 AI x Software Benchmark is available for download at key.com.

About KeyBanc Capital Markets
KeyBanc Capital Markets is a leading corporate and investment bank providing capital markets and advisory solutions to emerging growth and middle market companies, private equity firms, and asset managers. Our deep industry expertise, broad capabilities, and unique ideas and execution capabilities are seamlessly delivered to companies across the Consumer & Retail, Diversified Industries, Financial Services, Healthcare, Industrial, Oil & Gas, Real Estate, Utilities, Power & Renewables and Technology verticals. With more than 800 professionals across a national platform, KeyBanc Capital Markets has raised more than $125 billion of capital over the last twelve months for its clients and has an award-winning equity research team that provides coverage on over 500 publicly traded companies.

KeyBanc Capital Markets is a trade name under which the corporate and investment banking products and services of KeyCorp® and its subsidiaries, KeyBanc Capital Markets Inc., Member FINRA/SIPC ("KBCM"), and KeyBank National Association ("KeyBank N.A."), are marketed. Securities products and services are offered by KeyBanc Capital Markets Inc. and its licensed securities representatives. Banking products and services are offered by KeyBank N.A. Securities products and services: Not FDIC Insured • No Bank Guarantee • May Lose Value

About KeyCorp
KeyCorp's roots trace back more than 200 years to Albany, New York. Headquartered in Cleveland, Ohio, Key is one of the nation's largest bank-based financial services companies, with assets of approximately $193 billion at September 30, 2026.

Key provides deposit, lending, cash management, and investment services to individuals and businesses in 15 states under the name KeyBank National Association through a network of approximately 950 branches and approximately 1,100 ATMs. Key also provides a broad range of sophisticated corporate and investment banking products, such as merger and acquisition advice, public and private debt and equity, syndications, and derivatives to middle market companies in selected industries throughout the United States under the KeyBanc Capital Markets trade name. For more information, visit https://www.key.com/. KeyBank Member FDIC.