B2B and B2C have finally chalked up a strong quarter, after a dismal Q1, where tariff fears cratered markets, sparked layoffs, and caused companies and consumers to brace for the worst.

B2B saw it’s strongest quarter in 12 months, while B2C’s growth rate overpowered an anticipated seasonal pullback in consumer spending.

While a rebound was expected in Q2, as panic subsided and the market adjusted to a new reality of $3T in US tariffs – this doesn’t fully account for this quarter’s exceptional results.

Instead, we’re seeing early victories from the investments and reorganizations that companies have made to chase the AI opportunity – resulting in stickier products and new capabilities to monetize.

Let’s break down the data behind this Q2 rally, and forecast what’s next for SaaS, in the back half of 2025.

Despite a rocky start to April (where annualized growth temporarily dipped into the negatives), overall, B2B SaaS saw very strong Q2 growth  – ending the quarter with 10 consecutive weeks of 10% annualized growth.

This was the best performance B2B has seen in 12 months, with the previous 3 quarters seeing an annualized growth rate that hovered between 3-5%, punctuated by frequent slowdowns. 

This rebound was primarily driven by a 5.4% increase in sales over the quarter, combined with a 17% drop in churn.

While the ProfitWell SaaS Index cannot directly measure AI growth in SaaS, we strongly suspect that this is the primary cause of B2B’s Q2 growth – especially with a flurry of recent AI company acquisitions and the meteoric revenue growth of several nascent AI companies.

Established SaaS companies have also raced to integrate AI with their products – even laying off staff to chase the opportunity. Investments made in early Q1 have started to pay dividends – with new functionality added to existing product lines – growing sales and improving stickiness.

Combining these AI tailwinds with reports of expected Fed rate cuts in Q3, leads us to forecast a B2B CAGR in excess of 10%, for the remainder of 2025.

B2C also brought good news, with 8.0% annualized growth in May, and 5.3% in June, despite entering the summer – a season where consumer software spend drops significantly, as consumers reallocate their disposable income to travel and in-person experiences.

By examining our ProfitWell New Sales Index, we find evidence of AI growth battling against the summer slowdown in consumer spending – in April, New Sales saw solid growth, with the New Sales Index averaging 1.046 (3.5% higher than Q1’s average), before being pulled down by 10.5% to a mere 0.936 on the sales index through May and June.

While a 10.5% drop is a significant blow to sales, it is worth noting that B2C typically experiences an >80% drop in annualized growth as summer begins. However, between May and June this year, B2C CAGR only fell by 33%.

The jury is still out on whether this summer’s seasonal slowdown is delayed, or will in fact be greatly diminished this year. However, what is clear, is that AI has made a significant impact on consumer SaaS growth, and when the summer is over, will likely push B2C to new heights for the rest of 2025.

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