The SaaS Metrics That Matter - Deepstash
The SaaS Metrics That Matter

The SaaS Metrics That Matter

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1. Growth

1. Growth

  • MRR or ARR: For startups seeking a Series A funding round, the old benchmark used to be $1 million in ARR. But recently, the threshold has been around $500k ARR, as rounds get preempted and happen earlier.
  • Compound Monthly Growth Rate (CMGR): For startups seeking Series A or B funding, we like to see a CMGR of at least 15% below $1M ARR and 10% above $1M ARR. A CMGR of 10% is about 3x year-over-year growth.
  • MRR Components: Retained MRR / New MRR / Resurrected MRR / Expansion MRR / Contraction MRR / Churned MRR
  • Customer Concentration: Is growth driven by a few big contracts or many small ones?


70 reads

2. Retention

2. Retention

  • Dollar Retention / Net Revenue Retention (NRR): measures how much revenue a cohort is generating in each period relative to its original size.
  • Logo Retention: measures the percent of customers that stay active (non-churned).

Logo Retention is typically a function of customer size: 90-95% is common for enterprises, 85% for mid-market, and 70-80% for small businesses.

Dollar Retention is much more important than Logo Retention.


118 reads

3. Sales Efficiency / Unit Economics

3. Sales Efficiency / Unit Economics

  • New Sales ARR vs S&M Expense: How much did S&M departments (all programs and personnel) spend vs how much New Sales ARR was added in the same period. 
  • CAC: divides S&M expense in the preceding period (month or quarter) by the number of new customers in the current period.
  • New ACV vs CAC: It’s useful to compare Annual Contract Value (ACV) of new customers to their CAC. Ideally, ACV is greater than CAC.
  • CAC Payback: divide S&M spend by MRR x Gross Margin. 
  • Magic Number: the Net New ARR in a period divided by S&M expense from the prior period. Ideally, the ratio is > 1.


14 reads

4. Margins

4. Margins

  • Gross Margin: reflects a company’s margin after subtracting the cost of goods sold (COGS) from revenue. In the long-term, SaaS companies should have a Gross Margin of at least 75%.
  • LTV: is the cumulative gross profit contribution, net of CAC, of the average customer in a cohort. Therefore, LTV incorporates CAC, Dollar Retention, and Gross Margin to show overall company health. Healthy cohorts cross the $0 LTV line before month 12, and LTV grows to at least 3x original CAC over time.


13 reads

5. Capital Efficiency

  • Burn Multiple: a company’s Net Burn divided by its Net New ARR in a given period. For fast-growing SaaS companies, a Burn Multiple of less than one is amazing, but anything less than two is still quite good.
  • Hype Ratio: Capital Raised (or Burned) divided by ARR.


30 reads

6. Engagement

  • DAU/MAU: A good metric for most SaaS startups is 40% DAU/MAU during non-holiday weekdays.
  • DAU/WAU: A good metric for most SaaS startups is 60% DAU/WAU during non-holiday weekdays


44 reads


Send company metrics through SaasGrid to be considered for an investment.


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