Ben | The SaaS CFO Profile picture
Mar 14, 2023 8 tweets 4 min read Read on X
Your cash balance is the result of the decisions you make every day in your business.

If you're in a cash-burn mode, you must have a path to profitability. Understand the levers to pull with my 5 Pillar SaaS Metrics Framework.

Quick summary. #saas
I use my framework as a roadmap to financial transparency and better decision-making in SaaS.

Move from left to right. Right metrics for the right stage of your business. #metrics Image
Pillar 1️⃣ - Growth📈

Understanding the “layers” of recurring revenue is key to understanding growth.

➡️ New
➡️ Expansion
➡️ Contraction
➡️ Churn Image
Pillar 2️⃣ - Retention↩️

You must understand the health of your recurring revenue in SaaS.

Great #retention provides cash flow stability and drives efficient revenue growth.

GDR and NDR focus on your existing customers. NPS is a nice supplement. Image
Pillar 3️⃣ - Margins💱

Understanding overall and revenue stream margins are fundamental to good financial management.

You know what is working and what is not working. You know where to focus.

A properly structured P&L is key to margin calculations. Image
Pillar 4️⃣ - Financial Profile 📔

The Rule of 40 adds financial discipline to your decision-making process. Growth vs profit?

Below gross profit, you must understand your OpEx profile. Where are you investing?

Do we want to run positive or negative #EBITDA? Image
Pillar 5️⃣ - Efficiency 🔣

A lot of investment is poured into sales and marketing.

It's essential to track sales and marketing expenses and the resulting ROI.

Cost of ARR is one of my favorites. Intuitive and great benchmarks available.

We must understand org efficiency. Image
SaaS Resources: if you like these posts, join my newsletter here: mailchi.mp/df1db6bf8bca/t… If you want to apply this framework to your business, learn more here: thesaasacademy.com/saas-metrics-f…

• • •

Missing some Tweet in this thread? You can try to force a refresh
 

Keep Current with Ben | The SaaS CFO

Ben | The SaaS CFO Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @TheSaaSCFO

Mar 21, 2023
Who are the top HRIS players in SaaS? Check out the chart below from my 4th annual survey.

#HRIS #saas

Quick summary below with more details.
HRIS Highlights
HRIS by Company ARR Size

Gusto appears to dominate the ARR categories up to $4M in ARR. ADP and Gusto are very close in the $5M to $10M range and then ADP takes over at $11M ARR and above.
Read 4 tweets
Mar 18, 2023
Hey, SaaS founders and finance pros, have you heard of Remaining Performance Obligations (RPO)?

It's a required disclosure for public SaaS companies and provides forward-looking revenue visibility.

Quick thread. #saas #RPO
RPO is the value of contracted revenue that SaaS companies expect to recognize in the future from existing contracts with customers.

It's an important measure of a company's revenue visibility and backlog.
Salesforce's (CRM) definition:

The “contracted revenue that has not yet been recognized and includes unearned revenue and unbilled amounts that will be recognized as revenue in future periods.” Image
Read 9 tweets
Mar 1, 2023
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 Image
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
Mar 1, 2023
2023 is about time to value!

Watch this short demo on how you can create and publish your first #SaaS metrics dashboard in 2 minutes.

Follow the thread to see this live dashboard in your browser and how to create your dashboard account.
See the live dashboard here. It's very easy to share with your team, Board, and investors without adding them as users. app.backofficetools.com/metricsdashboa…
To create an account and your first dashboard, register for this short video tutorial here. thesaasacademy.com/offers/FGT86tv…
Read 4 tweets
Feb 3, 2023
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? Image
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
Jan 31, 2023
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

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Don't want to be a Premium member but still want to support us?

Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!

Ethereum

0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy

Bitcoin

3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us!

:(