Summary: Saas Metrics Guide
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1 1 Revenue Metrics
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How is ARR different from MRR?
Annual Recurring Revenue is simply the annualized version of MRR.- Represents total recurring revenue for a year
- Useful for long-term financial planning
- Provides a bigger picture of revenue trends
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What does ARPU measure and how is it calculated?
Average Revenue Per User calculates revenue generated per customer.- Formula: Total Revenue ÷ Number of Customers
- Can be assessed monthly or annually
- Indicates customer value and pricing strategy
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What is MRR and how is it calculated?
Monthly Recurring Revenue is defined as:- Total recurring revenue during a month
- Focuses solely on subscription income
- Important for forecasting and growth
- Helps in assessing company performance
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What does ARR stand for and how is it derived?
Annual Recurring Revenue is calculated by:- Annualizing the MRR figure
- Multiplying MRR by 12
- Provides insights on long-term revenue
- Essential for financial projections
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What is LTV and how is it computed?
Customer Lifetime Value is calculated based on:- Projected revenue from a customer
- Formula: ARPU × Customer Lifetime (in months)
- Helps in understanding customer value
- Critical for acquisition cost analysis
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2 2 Growth Metrics
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What is the Customer Growth Rate and how is it calculated?
This percentage reflects the increase in customers over a specific time period. Calculation involves:- Subtracting lost customers from new customers
- Dividing by total customers at the start
- Multiplying by 100
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How does one determine the MRR Growth Rate?
The MRR Growth Rate indicates monthly percentage growth of Monthly Recurring Revenue (MRR).- Focus on the change in MRR over one month
- Represents the growth trend over time
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3 3 Retention & Churn Metrics
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What does Revenue Churn Rate signify and what is its calculation?
It indicates the percentage of revenue lost due to customer actions. The formula is:
- Lost Revenue ÷ Total Revenue at Start × 100. -
Define Net Revenue Retention (NRR) and its formula.
NRR measures retained revenue from existing customers, factoring in upgrades. The formula is:
- ((Starting MRR + Expansion - Churn) ÷ Starting MRR) × 100. -
What are key metrics important for evaluating a SaaS business?
Important metrics include:- Monthly Recurring Revenue (MRR)
- Customer Acquisition Cost (CAC)
- Churn Rate
- Lifetime Value (LTV)
- Average Revenue Per User (ARPU)
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