SaaS Metrics Glossary: MRR, ARR, NRR, LTV & CAC

Revenue

Monthly Recurring Revenue (MRR) Monthly Recurring Revenue (MRR) is the total predictable subscription revenue a business expects to receive ev... Annual Recurring Revenue (ARR) Annual Recurring Revenue (ARR) is the value of a company's recurring subscription revenue normalized to a one-... Average Revenue Per User (ARPU) Average Revenue Per User (ARPU), sometimes called ARPA (per account), is the average recurring revenue generat... Bookings Bookings are the total contract value signed in a period - the full dollar commitment upfront, including multi-... Annual Contract Value (ACV) ACV is the annualized value of a customer contract - the per-year average across its term, used to size and seg... Total Contract Value (TCV) TCV is the full dollar value of a customer contract over its entire term, including recurring and one-time fees...

Growth

MRR Growth Rate MRR Growth Rate is the percentage change in Monthly Recurring Revenue from one month to the next. Net New MRR Net New MRR is the net change in Monthly Recurring Revenue in a period — new plus expansion minus contraction ... Expansion MRR Expansion MRR is the additional Monthly Recurring Revenue generated from existing customers through upgrades, ... SaaS Quick Ratio The SaaS Quick Ratio measures growth efficiency by comparing the MRR a company gains to the MRR it loses in th... Rule of 40 The Rule of 40 states that a healthy SaaS company's revenue growth rate plus its profit margin should equal or...

Retention & churn

Customer Churn Rate Customer Churn Rate is the percentage of customers who cancel or fail to renew during a given period. Revenue Churn Rate Revenue Churn Rate is the percentage of recurring revenue lost in a period from cancellations and downgrades, ... Gross Revenue Retention (GRR) Gross Revenue Retention (GRR) is the percentage of recurring revenue retained from existing customers over a p... Net Revenue Retention (NRR) Net Revenue Retention (NRR) is the percentage of recurring revenue retained from existing customers over a per... Cohort Analysis Cohort Analysis groups customers by a shared start period and tracks how a metric — usually retention or reven... Contraction MRR Contraction MRR is recurring revenue lost when an existing customer downgrades - a smaller plan, fewer seats - ... Renewal Rate Renewal Rate is the percentage of customers (or contract value) up for renewal in a period who actually renewe... Net Promoter Score (NPS) NPS is a single-question survey that measures how likely your customers are to recommend you - the most cited l...

Unit economics

Customer Lifetime Value (LTV) Customer Lifetime Value (LTV) is the total gross profit a business expects to earn from a customer over the en... Customer Acquisition Cost (CAC) Customer Acquisition Cost (CAC) is the average total sales and marketing cost required to acquire one new cust... LTV to CAC Ratio (LTV:CAC) The LTV:CAC ratio compares the lifetime value of a customer to the cost of acquiring them, measuring the retur... CAC Payback Period CAC Payback Period is the number of months it takes for the gross profit from a customer to recover the cost o... Gross Margin Gross Margin is the percentage of revenue left after subtracting the direct cost of delivering the product or ... SaaS Magic Number The SaaS Magic Number measures sales-and-marketing efficiency: how much new annual recurring revenue each doll...

Sales & pipeline

Sales Pipeline Sales Pipeline is the total value of all open deals a sales team is working, organized by stage - the dollars ... Weighted Pipeline Weighted Pipeline discounts every open deal by its probability of closing, turning a raw pipeline total into ex... Pipeline Coverage Pipeline Coverage is the ratio of open pipeline to the revenue target for a period - how many dollars of pipeli... Sales Forecast A Sales Forecast predicts how much revenue will close in a future period, built from open pipeline, win probabi... Sales Funnel The Sales Funnel is the staged view of how deals progress from entry to close, showing counts and the conversi... Deal Stage A Deal Stage is the labeled step a deal occupies in your pipeline, from first qualification to closed-won or lo... Deal Win Probability Deal Win Probability is the likelihood a given deal closes won, usually assigned by stage - the multiplier behi... Sales Velocity Sales Velocity is how fast revenue moves through your pipeline, combining count, deal size, win rate, and cycle... Sales Cycle Length Sales Cycle Length is the average number of days between a deal being created and being closed - the speed of y... Average Deal Size Average Deal Size is the mean value of your closed-won deals in a period - a core input to sales velocity and p... Deal Age Deal Age is how long an open deal has sat in the pipeline - the days since it was created, flagging stalled dea... Win Rate Win Rate is the percentage of qualified opportunities that result in closed-won deals - a reliable indicator of... Win/Loss Analysis Win/Loss Analysis examines closed deals to understand why you win and lose, pairing win and loss rates with the... Sales Activity Sales Activity is the count of logged engagements - emails, calls, meetings, tasks - the input work that later ... Quota Attainment Quota Attainment is the percentage of their target a rep or team actually closed - the core measure of sales pe... Sales Efficiency Sales Efficiency is new ARR generated per dollar of sales and marketing spend - the denominator of every CAC an...

Financial health

Burn Rate Burn Rate is the rate at which a company spends its cash reserves, usually expressed per month. Net burn is sp... Cash Runway Cash Runway is the number of months a company can continue operating at its current net burn rate before it ru... Burn Multiple Burn Multiple is net cash burn divided by net new ARR - how many dollars of capital you spend to add a dollar ... Days Sales Outstanding (DSO) DSO measures the average number of days it takes to collect payment after a sale - the gap between booked reven... ARR per Employee ARR per Employee divides total annual recurring revenue by full-time headcount - a clean lens on operational ef...