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The lower Quick Ratio for these larger, more mature companies is further proof that the Quick Ratio looks quite a bit different when used to evaluate young SaaS startups and more mature, steady-state companies.

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More SaaS + Software Stats

The fastest growing SaaS companies raise an average of $9.5M in Series A funding

Account Churn Rate (ACR) = customers at beginning of month – customers at the end of month / customers at beginning of month

Revenue Churn Rate = (RCR) (MRR at beginning of month – MRR at end of month) – MRR in upgrades during month / MRR at beginning of month

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business

Customer Acquisition Cost (CAC) = sum of all sales & marketing expenses/ number of new customers added

Three uses for the SaaS Guidelines

The average Quick Ratio of fastest growing SaaS companies (those with a CAGR of over 50%) is 3.9: generating $3.9 in revenue for every $1 lost to revenue churn

It’s common for startups to grow rapidly, doubling or tripling in size year over year, until they hit $5M in ARR

In contrast to these, the median annual churn rate for smaller, private SaaS companies with less than $10M in revenue is 20%

86% of SaaS businesses treat “New Customer Acquisition” as their highest growth priority, both in terms of executive support and funding available

More Growth Strategy Stats

Achieving a SaaS Quick Ratio of 4 is a good benchmark for young, high-growth companies but the equation changes as those companies reach scale

For SaaS companies valued at over $1billion, the median amount of financing raised is $206million

SAAS companies with >$250K median ACV book nearly 25% of their contracts at 3 years or longer

Invention is 10% inspiration and 90% perspiration.

The median SaaS business loses about 10% of its revenue to churn each year and that works out to about 0.83% revenue churn a month

Customer Acquisition Cost (CAC) = sum of all sales & marketing expenses/ number of new customers added

As of December 2018, there were total 105,000 employees in Lockheed Martin, as compared to 126,000 employees in 2015.

Is your SaaS business viable?

Internet sales strategies are the only sales method to see a decline in CAC, dropping from $0.54 to $0.42 between 2014 and 2015

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; which may have a dramatically negative effect on your company’s growth. Source: Mckinsey