A subscription business runs on a small number of figures. These are the ones worth reporting.
Software-as-a-service lives on recurring economics. ARR, churn, NRR and CAC payback let you balance growth against efficiency. They also give investors one language for comparing companies at different stages.
Revenue and growth
Annual and monthly recurring revenue turn subscription bookings into a run rate. Split net new ARR into new logos, expansion, contraction and churn, because the total hides which one is moving.
Read growth alongside retention. Weak retention looks fine until the early cohorts mature.
- ARR and MRR, and the parts of net new ARR
- Logo and revenue churn, gross and net
- Net revenue retention by cohort
- Average revenue per account
Unit economics
Customer acquisition cost divided by gross-margin-adjusted ARPA gives payback in months. It is the clearest signal of how much cash your growth needs.
LTV to CAC summarizes the long-run return on acquisition spend. Split it by channel before you move any budget.
Efficiency
The Rule of 40 adds revenue growth rate to profit margin. Many public SaaS companies aim for a combined 40% or more. Early-stage firms usually lead with growth and watch burn multiple instead.
Burn multiple compares net burn to net new ARR. The lower it sits against your peers, the less you are paying for each point of growth.
Product and support numbers
Engagement, ticket volume and deployment success all track with retention, but only within a segment. Compare like with like.
Write down how each metric is calculated. Otherwise a board comparison year over year is comparing two different things.
Written by the team at Ambivo, a business platform that keeps CRM, accounting and ERP on one customer record. This article is general guidance on the topic rather than a description of Ambivo features.