Finance Metrics Quickref

1---2name: finance-metrics-quickref3description: Look up SaaS finance metrics, formulas, and benchmarks fast. Use when you need a quick metric definition, formula, or benchmark during analysis.4intent: >-5  Quick reference for any SaaS finance metric without deep teaching. Use this when you need a fast formula lookup, benchmark check, or decision framework reminder. For detailed explanations, calculations, and examples, see the related deep-dive skills.6type: component7best_for:8  - "Quick metric lookups during product or finance reviews"9  - "Checking formulas and benchmarks without reading a long explainer"10  - "Refreshing decision rules for common SaaS metrics"11scenarios:12  - "What is the formula for NRR and what is a good benchmark?"13  - "Give me a quick reference for CAC payback and Rule of 40"14  - "I need a fast SaaS metrics cheat sheet for a business review"15---16 17 18## Purpose19 20Quick reference for any SaaS finance metric without deep teaching. Use this when you need a fast formula lookup, benchmark check, or decision framework reminder. For detailed explanations, calculations, and examples, see the related deep-dive skills.21 22This is not a teaching tool—it's a cheat sheet optimized for speed. Scan, find, apply.23 24## Key Concepts25 26### Metric Categories27 28Metrics are organized into four families:29 301. **Revenue & Growth** — Top-line money (revenue, ARPU, ARPA, MRR/ARR, churn, NRR, expansion)312. **Unit Economics** — Customer-level profitability (CAC, LTV, payback, margins)323. **Capital Efficiency** — Cash management (burn rate, runway, OpEx, net income)334. **Efficiency Ratios** — Growth vs. profitability balance (Rule of 40, magic number)34 35### When to Use This Skill36 37**Use this when:**38- You need a quick formula or benchmark39- You're preparing for a board meeting or investor call40- You're evaluating a decision and need to check which metrics matter41- You want to identify red flags quickly42 43**Don't use this when:**44- You need detailed calculation guidance (use `saas-revenue-growth-metrics` or `saas-economics-efficiency-metrics`)45- You're learning these metrics for the first time (start with deep-dive skills)46- You need examples and common pitfalls (covered in related skills)47 48---49 50## Application51 52### All Metrics Reference Table53 54| **Metric** | **Formula** | **What It Measures** | **Good Benchmark** | **Red Flag** |55|------------|-------------|----------------------|-------------------|--------------|56| **Revenue** | Total sales before expenses | Top-line money earned | Growth rate >20% YoY (varies by stage) | Revenue growing slower than costs |57| **ARPU** | Total Revenue / Total Users | Revenue per individual user | Varies by model; track trend | ARPU declining cohort-over-cohort |58| **ARPA** | MRR / Active Accounts | Revenue per customer account | SMB: $100-$1K; Mid: $1K-$10K; Ent: $10K+ | High ARPA + low ARPU (undermonetized seats) |59| **ACV** | Annual Recurring Revenue per Contract | Annualized contract value | SMB: $5K-$25K; Mid: $25K-$100K; Ent: $100K+ | ACV declining (moving downmarket unintentionally) |60| **MRR/ARR** | MRR × 12 = ARR | Predictable recurring revenue | Growth + quality matter; track components | New MRR declining while churn stable/growing |61| **Churn Rate** | Customers Lost / Starting Customers | % of customers who cancel | Monthly <2% great, <5% ok; Annual <10% great | Churn increasing cohort-over-cohort |62| **NRR** | (Start ARR + Expansion - Churn - Contraction) / Start ARR × 100 | Revenue retention + expansion | >120% excellent; 100-120% good; 90-100% ok | NRR <100% (base is contracting) |63| **Expansion Revenue** | Upsells + Cross-sells + Usage Growth | Additional revenue from existing customers | 20-30% of total revenue | Expansion <10% of MRR |64| **Quick Ratio** | (New MRR + Expansion MRR) / (Churned MRR + Contraction) | Revenue gains vs. losses | >4 excellent; 2-4 healthy; <2 leaky bucket | Quick Ratio <2 (leaky bucket) |65| **Gross Margin** | (Revenue - COGS) / Revenue × 100 | % of revenue after direct costs | SaaS: 70-85% good; <60% concerning | Gross margin <60% or declining |66| **CAC** | Total S&M Spend / New Customers | Cost to acquire one customer | Varies: Ent $10K+ ok; SMB <$500 | CAC increasing while LTV flat |67| **LTV** | ARPU × Gross Margin % / Churn Rate | Total revenue from one customer | Must be 3x+ CAC; varies by segment | LTV declining cohort-over-cohort |68| **LTV:CAC** | LTV / CAC | Unit economics efficiency | 3:1 healthy; <1:1 unsustainable; >5:1 underinvesting | LTV:CAC <1.5:1 |69| **Payback Period** | CAC / (Monthly ARPU × Gross Margin %) | Months to recover CAC | <12 months great; 12-18 ok; >24 concerning | Payback >24 months (cash trap) |70| **Contribution Margin** | (Revenue - All Variable Costs) / Revenue × 100 | True contribution after variable costs | 60-80% good for SaaS; <40% concerning | Contribution margin <40% |71| **Burn Rate** | Monthly Cash Spent - Revenue | Cash consumed per month | Net burn <$200K manageable early; <$500K growth | Net burn accelerating |72| **Runway** | Cash Balance / Monthly Net Burn | Months until money runs out | 12+ months good; 6-12 ok; <6 crisis | Runway <6 months |73| **OpEx** | S&M + R&D + G&A | Costs to run the business | Should grow slower than revenue | OpEx growing faster than revenue |74| **Net Income** | Revenue - All Expenses | Actual profit/loss | Early negative ok; mature 10-20%+ margin | Losses accelerating without growth |75| **Rule of 40** | Revenue Growth % + Profit Margin % | Balance of growth vs. efficiency | >40 healthy; 25-40 ok; <25 concerning | Rule of 40 <25 |76| **Magic Number** | (Q Revenue - Prev Q Revenue) × 4 / Prev Q S&M | S&M efficiency | >0.75 efficient; 0.5-0.75 ok; <0.5 fix GTM | Magic Number <0.5 |77| **Operating Leverage** | Revenue Growth vs. OpEx Growth | Scaling efficiency | Revenue growth > OpEx growth | OpEx growing faster than revenue |78| **Gross vs. Net Revenue** | Net = Gross - Discounts - Refunds - Credits | What you actually keep | Refunds <10%; discounts <20% | Refunds >10% (product problem) |79| **Revenue Concentration** | Top N Customers / Total Revenue | Dependency on largest customers | Top customer <10%; Top 10 <40% | Top customer >25% (existential risk) |80| **Revenue Mix** | Product/Segment Revenue / Total Revenue | Portfolio composition | No single product >60% ideal | Single product >80% (no diversification) |81| **Cohort Analysis** | Group customers by join date; track behavior | Whether business improving or degrading | Recent cohorts same/better than old | Newer cohorts perform worse |82| **CAC Payback by Channel** | CAC / Monthly Contribution (by channel) | Payback by acquisition channel | Compare across channels | One channel far worse than others |83| **Gross Margin Payback** | CAC / (Monthly ARPU × Gross Margin %) | Payback using actual profit | Typically 1.5-2x simple payback | Payback using margin >36 months |84| **Unit Economics** | Revenue per unit - Cost per unit | Profitability of each "unit" | Positive contribution required | Negative contribution margin |85| **Segment Payback** | CAC / Monthly Contribution (by segment) | Payback by customer segment | Compare to allocate resources | One segment unprofitable |86| **Incrementality** | Revenue caused by action - Baseline | True impact of marketing/promo | Measure with holdout tests | Celebrating revenue that would've happened anyway |87| **Working Capital** | Cash timing between revenue and collection | Cash vs. revenue timing | Annual upfront > monthly billing | Long payment terms killing runway |88 89---90 91### Quick Decision Frameworks92 93Use these frameworks to combine metrics for common PM decisions.94 95#### Framework 1: Should We Build This Feature?96 97**Ask:**981. **Revenue impact?** Direct (pricing, add-on) or indirect (retention, conversion)?992. **Margin impact?** What's the COGS? Does it dilute margins?1003. **ROI?** Revenue impact / Development cost101 102**Build if:**103- ROI >3x in year one (direct monetization), OR104- LTV impact >10x development cost (retention), OR105- Strategic value overrides short-term ROI106 107**Don't build if:**108- Negative contribution margin even with optimistic adoption109- Payback period exceeds average customer lifetime110 111**Metrics to check:** Revenue, Gross Margin, LTV, Contribution Margin112 113---114 115#### Framework 2: Should We Scale This Acquisition Channel?116 117**Ask:**1181. **Unit economics?** CAC, LTV, LTV:CAC ratio1192. **Cash efficiency?** Payback period1203. **Customer quality?** Cohort retention, NRR by channel1214. **Scalability?** Magic Number, addressable volume122 123**Scale if:**124- LTV:CAC >3:1 AND125- Payback <18 months AND126- Customer quality meets/beats other channels AND127- Magic Number >0.75128 129**Don't scale if:**130- LTV:CAC <1.5:1 AND131- No clear path to improvement132 133**Metrics to check:** CAC, LTV, LTV:CAC, Payback Period, NRR, Magic Number134 135---136 137#### Framework 3: Should We Change Pricing?138 139**Ask:**1401. **ARPU/ARPA impact?** Will revenue per customer increase?1412. **Conversion impact?** Help or hurt trial-to-paid conversion?1423. **Churn impact?** Create churn risk or reduce it?1434. **NRR impact?** Enable expansion or create contraction?144 145**Implement if:**146- Net revenue impact positive after churn risk147- Can test with segment before broad rollout148 149**Don't change if:**150- High churn risk without offsetting expansion151- Can't test hypothesis before committing152 153**Metrics to check:** ARPU, ARPA, Churn Rate, NRR, CAC Payback154 155---156 157#### Framework 4: Is the Business Healthy?158 159**Check by stage:**160 161**Early Stage (Pre-$10M ARR):**162- Growth Rate >50% YoY163- LTV:CAC >3:1164- Gross Margin >70%165- Runway >12 months166 167**Growth Stage ($10M-$50M ARR):**168- Growth Rate >40% YoY169- NRR >100%170- Rule of 40 >40171- Magic Number >0.75172 173**Scale Stage ($50M+ ARR):**174- Growth Rate >25% YoY175- NRR >110%176- Rule of 40 >40177- Profit Margin >10%178 179**Metrics to check:** Revenue Growth, NRR, LTV:CAC, Rule of 40, Magic Number, Gross Margin180 181---182 183### Red Flags by Category184 185#### Revenue & Growth Red Flags186| **Red Flag** | **What It Means** | **Action** |187|--------------|-------------------|------------|188| Churn increasing cohort-over-cohort | Product-market fit degrading | Stop scaling acquisition; fix retention first |189| NRR <100% | Base is contracting | Fix expansion or reduce churn before scaling |190| Revenue churn > logo churn | Losing big customers | Investigate why high-value customers leave |191| Quick Ratio <2 | Leaky bucket (barely outpacing losses) | Fix retention before scaling acquisition |192| Expansion revenue <10% of MRR | No upsell/cross-sell engine | Build expansion paths |193| Revenue concentration >50% in top 10 customers | Existential dependency risk | Diversify customer base |194 195#### Unit Economics Red Flags196| **Red Flag** | **What It Means** | **Action** |197|--------------|-------------------|------------|198| LTV:CAC <1.5:1 | Buying revenue at a loss | Reduce CAC or increase LTV before scaling |199| Payback >24 months | Cash trap (long cash recovery) | Negotiate annual upfront or reduce CAC |200| Gross margin <60% | Low profitability per dollar | Increase prices or reduce COGS |201| CAC increasing while LTV flat | Unit economics degrading | Optimize conversion or reduce sales cycle |202| Contribution margin <40% | Unprofitable after variable costs | Cut variable costs or increase prices |203 204#### Capital Efficiency Red Flags205| **Red Flag** | **What It Means** | **Action** |206|--------------|-------------------|------------|207| Runway <6 months | Survival crisis | Raise capital immediately or cut burn |208| Net burn accelerating without revenue growth | Burning faster without results | Cut costs or increase revenue urgency |209| OpEx growing faster than revenue | Negative operating leverage | Freeze hiring; optimize spend |210| Rule of 40 <25 | Burning cash without growth | Improve growth or cut to profitability |211| Magic Number <0.5 | S&M engine broken | Fix GTM efficiency before scaling spend |212 213---214 215### When to Use Which Metric216 217**Prioritizing features:**218- Revenue impact → Revenue, ARPU, Expansion Revenue219- Margin impact → Gross Margin, Contribution Margin220- ROI → LTV impact, Development cost221 222**Evaluating channels:**223- Acquisition cost → CAC, CAC by Channel224- Customer value → LTV, NRR by Channel225- Payback → Payback Period, CAC Payback by Channel226- Scalability → Magic Number227 228**Pricing decisions:**229- Monetization → ARPU, ARPA, ACV230- Impact → Churn Rate, NRR, Expansion Revenue231- Efficiency → CAC Payback (will pricing change affect it?)232 233**Business health:**234- Growth → Revenue Growth, MRR/ARR Growth235- Retention → Churn Rate, NRR, Quick Ratio236- Economics → LTV:CAC, Payback Period, Gross Margin237- Efficiency → Rule of 40, Magic Number, Operating Leverage238- Survival → Burn Rate, Runway239 240**Board/investor reporting:**241- Key metrics: ARR, Revenue Growth %, NRR, LTV:CAC, Rule of 40, Magic Number, Burn Rate, Runway242- Stage-specific: Early stage emphasize growth + unit economics; Growth stage emphasize Rule of 40 + Magic Number; Scale stage emphasize profitability + efficiency243 244---245 246## Examples247 248### Example 1: Feature Investment Sanity Check249 250You are deciding whether to build a premium export feature.251 2521. Use Framework 1 (Should We Build This Feature?)2532. Pull baseline metrics: ARPU, Gross Margin, LTV, Contribution Margin2543. Model optimistic, base, and downside adoption2554. Reject if contribution margin turns negative in downside case256 257Quick output:258- Base case ROI: 3.8x259- Contribution margin impact: +4 points260- Decision: Build now, with a 90-day post-launch check on churn and expansion261 262### Example 2: Channel Scale Decision263 264Paid social is generating many signups but weak retention.265 2661. Use Framework 2 (Should We Scale This Acquisition Channel?)2672. Check CAC, LTV:CAC, Payback Period, and NRR by channel2683. Compare against best-performing channel, not company average269 270Quick output:271- LTV:CAC: 1.6:1272- Payback: 26 months273- NRR: 88%274- Decision: Do not scale; cap spend and run targeted optimization tests275 276---277 278## Common Pitfalls279 280- Using blended company averages instead of cohort or channel-level metrics281- Scaling acquisition when Quick Ratio is weak and retention is deteriorating282- Treating high LTV:CAC as sufficient without checking payback and runway impact283- Raising prices based on ARPU lift alone without modeling churn and contraction284- Comparing benchmarks across mismatched company stages or business models285- Tracking many metrics without a clear decision question286 287---288 289## References290 291### Related Skills (Deep Dives)292- `saas-revenue-growth-metrics` — Detailed guidance on revenue, retention, and growth metrics (13 metrics)293- `saas-economics-efficiency-metrics` — Detailed guidance on unit economics and capital efficiency (17 metrics)294- `feature-investment-advisor` — Uses these metrics to evaluate feature ROI295- `acquisition-channel-advisor` — Uses these metrics to evaluate channel viability296- `finance-based-pricing-advisor` — Uses these metrics to evaluate pricing changes297- `business-health-diagnostic` — Uses these metrics to diagnose business health298 299### External Resources300- **Bessemer Venture Partners:** "SaaS Metrics 2.0" — Comprehensive SaaS benchmarking301- **David Skok (Matrix Partners):** "SaaS Metrics" blog series — Deep dive on unit economics302- **Tomasz Tunguz (Redpoint):** SaaS benchmarking research and blog303- **ChartMogul, Baremetrics, ProfitWell:** SaaS analytics platforms with metric definitions304- **SaaStr:** Annual SaaS benchmarking surveys305 306### Provenance307- Adapted from `research/finance/Finance_QuickRef.md`308- Formulas from `research/finance/Finance for Product Managers.md`309- Decision frameworks from `research/finance/Finance_For_PMs.Putting_It_Together_Synthesis.md`