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Revenue
Monthly Recurring Revenue (MRR)
Annual Recurring Revenue (ARR)
Subscription Revenue
Revenue Run Rate
Rule of 40
Gross Revenue Retention (GRR)
Net Revenue Retention (NRR)
Churn Rate
Cost
Customer Acquisition Cost (CAC)
CAC Payback Period
Efficiency
LTV:CAC Ratio
SaaS Magic Number
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Revenue

Monthly Recurring Revenue (MRR)

MRR is the sum of the predictable or confirmed revenues your company earns from active subscriptions every month.

Annual Recurring Revenue (ARR)

ARR is the recurring revenue from your SaaS business’ subscriptions, normalized over a period of one year.

Subscription Revenue

Subscription revenue is the cash a company earns when a customer subscribes to its product or service.

Revenue Run Rate

The revenue run rate is an annualized version of a company’s earnings during a shorter period (a week, month, etc.)

Rule of 40

The Rule of 40 states the sum of a SaaS company’s revenue growth and profit margin should be equal to or greater than 40%

Gross Revenue Retention (GRR)

Gross Revenue Retention is the percentage of revenue a company retains from its customers over a defined period (usually one year).

Net Revenue Retention (NRR)

Net Revenue Retention or NRR is the percentage of recurring revenue a SaaS company retains from its existing customers over a specified time period.

Churn Rate

The churn rate or customer churn rate is the percentage of customers that do not renew their subscriptions over a specified period such as a month or year. The revenue churn rate is the percentage of revenue a company loses over a specified period.

Cost

Customer Acquisition Cost (CAC)

What is Customer Acquisition Cost? Why It’s Important and How to Calculate it (with Examples)
Total marketing and sales spend in a previous period / Number of new customers acquired in the current period

CAC Payback Period

CAC Payback Period – Formula, Benchmarks and How to Reduce It
CAC Payback Period is the time it takes a company to recoup the money it spent to acquire a customer.

Efficiency

LTV:CAC Ratio

What is the LTV:CAC Ratio? How to Calculate, Analyze, and Benchmark Your SaaS Company’s Numbers
The LTV:CAC ratio compares the average revenue you generate from your customers with the cost to acquire them.

SaaS Magic Number

What Is the Magic Number in SaaS? How to Calculate It, Benchmarks, and Examples
The SaaS Magic Number quantifies how much new incremental recurring revenue is generated for every dollar sales and marketing (S&M) spends. Your company’s SaaS Magic Number lets you and potential investors gauge your sales and marketing efficiency.
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