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Ben | The SaaS CFO

@TheSaaSCFO

Mar 1

SaaS Metrics are more powerful when used together. In isolation, they offer less context.

Assess your CAC Profile to grasp the full picture of GTM efficiency.

🧵 Here’s a quick summary to help you analyze your CAC profile and grow. 📈 #saas

You will need the following inputs for CAC profile calculations:

1️⃣Sales expenses - wages, taxes, benefits, travel, commissions, CRM, training, etc.
2️⃣Marketing - marketing, paid ads, conferences, brand, swag, ESP, etc.
3️⃣Bookings - dollars and logo counts

4️⃣MRR/ARR - includes new, expansion, and maybe contraction

5️⃣Logo count - the number of new customers/users each month

6️⃣Gross Margin - recurring gross margin and maybe variable gross margin

Read 8 tweets

Ben | The SaaS CFO

@TheSaaSCFO

Feb 3

How important are clear and distinct revenue streams in SaaS? Well, your valuation depends on it.

The proper SaaS P&L setup helps your team, your Board, and your investors.

Quick guide. #saas

SaaS Revenue Streams

It's no longer just subscription revenue for SaaS companies. That was SaaS pricing 1.0.

I've worked with SaaS companies that had 5 distinct revenue streams.

Have you clearly defined your revenue categories?

Subscription Revenue

🚀Generated from invoicing subscription contracts that range from monthly to multi-year. Your product and resold products. This is contracted MRR or ARR.

☠️Careful with resold products. I may roll up to subscriptions but I code to a different GL account

Read 10 tweets

Ben | The SaaS CFO

@TheSaaSCFO

Jan 31

Time for Advanced SaaS COGS. COGS vs OpEx is so important to get right.

But what if we have multiple revenue streams? Our COGS section must align with this.

Quick guide. #saas

What departments are included in pure-play SaaS COGS?

For pure-play SaaS, your COGS structure should include:

1⃣Technical Support
2⃣Professional Services
3⃣Customer Success
4⃣Dev Ops

Of course, CS is up for debate depending on their role.

Dev Ops = Cost of Ops in my example

What if we have more than just subscriptions and services?

It's very common in SaaS to have subscriptions, services, and variable revenue streams.

I had one client with all but managed services in the pic below.

Read 7 tweets

Ben | The SaaS CFO

@TheSaaSCFO

Jan 30

SaaS COGS vs. OpEx is a common discussion in my courses and with my clients.

What should I include in SaaS cost of goods sold (COGS)?

Quick guide below and why this is important. #saas

What departments are included in SaaS COGS?

For pure-play SaaS, your COGS structure should include:

1⃣Technical Support
2⃣Professional Services
3⃣Customer Success
4⃣Dev Ops

Of course, CS is up for debate depending on their role.

Dev Ops = Cost of Ops in my examples

📌Technical Support

They manage inbound customer contact regarding product bugs and how-to's.

💡Typical Expenses: Wages, payroll taxes, benefits, travel, training, internal software subscriptions
💡Margin: Included in recurring gross margin

Read 8 tweets

Ben | The SaaS CFO

@TheSaaSCFO

Jan 10

CFO’s will tell you that financial discipline never goes out of style. Good markets, bad markets. Doesn’t matter.

But with the tighter markets, everyone is calling for longer cash runways and attention to the Rule of 40 metric.

A quick post on the Rule of 40. #saas

What is the Rule of 40?

It's a financial framework that measures revenue growth vs profit margins. The Rule of 40 determines the health and/or attractiveness of your business. To CFO’s, it adds financial discipline to your decision-making process.

How to Calculate the Rule of 40

Rule of 40 = growth % + profit margin
If revenue growth is 15%
and profit margin is 20%
Your rule of 40 number is 35%
Can you have negative inputs? Yes, that’s the meaning of the Rule of 40.

Increase growth or profit to reach 40% or higher.

Read 9 tweets

Ben | The SaaS CFO

@TheSaaSCFO

Oct 28, 2022

I review a lot of SaaS P&L's. 90% are structured incorrectly or need improvement.

Quick thread on the 4 common mistakes in your SaaS P&L setup. With pictures :) #saas

The SaaS P&L Structure

A properly formatted SaaS P&L tells you so much! And it's easily consumable by operators and investors.

- gross profit
- margins by revenue stream
- OpEx profile
- EBITDA
- and it easily feeds S&M efficiency metrics

Cost of Ops = Dev Ops in this example

The Chart of Accounts

The COA is a numerical and descriptive listing of all the accounts on your general ledger from the balance sheet to the income statement.

This is "under the hood" of your P&L. You need enough rev and expense detail for proper coding, analysis, rollups.

Read 6 tweets

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