The Top 10 Financial Metrics to Run Your SaaS Business

July 21, 2023

As you're probably well aware, monitoring financial metrics is crucial for success in the SaaS industry. Without a clear understanding of how well your company is performing financially, you won't be able to make informed decisions about investments, pricing, and growth strategies. In this article, we'll provide a list and description of the top 10 financial metrics in SaaS operations.

  1. ‍Monthly Recurring Revenue (MRR)
    MRR is the cornerstone of financial metrics in the SaaS industry. It represents the amount of predictable, recurring revenue that a company generates from its subscribers each month.
  2. ‍Annual Run Rate (ARR)
    ARR represents the revenue a company is projected to earn over the course of a year based on current MRR.
  3. ‍Customer Acquisition Cost (CAC)
    This score represents how much you spend to get new customers and is crucial to determine how much you're spending to get new customers.
  4. ‍Churn Rate
    The churn rate refers to the percentage of customers who discontinue their subscription in a given period.
  5. ‍Customer Lifetime Value (LTV)
    LTV represents the total revenue that can be expected from a customer over the course of their subscription and is critical to determine the value of all your customers.
  6. Gross Margin
    Gross margin is another critical metric to understand how much you are spending on making revenue, including infrastructure and sales costs.
  7. ‍Burn Rate
    Burn rate is the rate at which a company is losing cash, which is an essential measure for any CFO.
  8. ‍Monthly Active Users (MAU)
    MAUs signify the number of people who use the product each month, which is another basis for how successful your SaaS business is.
  9. ‍Net Promoter Score (NPS)
    NPS tells you how satisfied your customers are with your service and correlates not only with increased loyalty but also with revenue growth.
  10. ‍Average Revenue per User (ARPU)
    ARPU measures the revenue generated by each user per unit of time, which can provide you with information regarding pricing.

By keeping a close eye on these SaaS financial metrics, you'll be able to raise the financial well-being of your company, keep your customers happy, and ensure continued growth.

In conclusion, it's essential that CFOs of SaaS companies know how to keep track of these financial metrics, and it is vital to have a great SaaS team in place to monitor and grow your metrics. By staying on top of these metrics and trends, you'll remain confident in making well-informed.

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