The average monthly recurring revenue (MRR) per user is referred to as ARPU.Most subscription-based firms monitor ARPU, particularly if they charge customers individually for their goods or services.
A common statistic used by firms with subscription- and SaaS-based business models is ARPA. Several companies track and measure ARPA on financial statements even though it is not recognized by GAAP since it gives a clear insight of profitability at a more specific level.
The amount of predictable revenue that your company receives from clients each year is called annual recurring revenue (ARR).
Business-to-consumer (B2C) refers to the practice of selling goods and services directly between an organization and the customers who will ultimately use them. The majority of businesses that sell directly to customers are referred to as B2C businesses.
The monthly negative free cash flow (FCF) is what is referred to as the burn rate. This can be calculated for a given month or as an average over a longer period of time, such as three months or a year.
The difference between the most recent six months and the six months before to that period of time is known as the most recent six months' gross profit, and it is used as a measure of expense efficiency together with the total operating expenses incurred over the previous six months.
Capital efficiency is measured by the burn multiple. The ratio of a company's revenue to the money it burned to produce that revenue is known as the burn multiple.
The CFA Institute, formerly known as the Association for Investment Management and Research (AIMR), awards the internationally recognized professional certification of chartered financial analyst (CFA) to individuals who have demonstrated their ability and integrity as financial analysts.
A corporation uses capital expenditures (CapEx) to purchase, upgrade, and maintain tangible assets including land, buildings, machinery, and other physical assets. A corporation frequently uses capex to launch new initiatives or make expenditures.
The overall cost of keeping a customer is known as the customer retention cost (CRC). This covers all expenses related to customer success, customer care, customer engagement, marketing, training, professional services, and any additional teams or resources.
The amount of gross profit one client brings in over their entire relationship with you (LTV) is your customer lifetime value. This is distinct from average revenue per account, which determines the monthly value of each customer.
The percentage of new customers added over the previous month as compared to the total number of customers is known as the customer growth rate. This is also referred to as new logo growth at times.
The percentage of clients your business lost during a predetermined time period is known as customer churn. SaaS and subscription-based businesses with recurring income frequently measure churn. A consumer has "churned" once they close their account or stop making subscription payments.
The Customer Acquisition Cost (CAC) is the sum of money spent on marketing and sales to bring in a single new customer.
The sum of money you spend to buy a new lead is your cost per lead. You can figure out your CPL for any time frame (day, month, quarter, etc.), and you can segment your data by market, channel, campaign, and other factors.
The term "cost of goods sold" (COGS) refers to the upfront expenses incurred in the production of your good or service. Depending on the type of business you have, different expenses fall under the COGS category.
Monthly recurring revenue that has decreased overall for a particular month due to downgrades or churn is known as contraction MRR.
The duration of the cash runway is the number of months. Forecasts can be used to predict your financial runway, or your burn rate can be used to determine it. Your company is burning money if it spends more than it brings in. Your burn rate is equal to your cash outlays less your cash inflows.
The amount of months it will take to recover the cost of obtaining a client is known as the customer acquisition cost (CAC) payback (your break-even point). It shouldn't come as a surprise to learn that you want to keep this timeframe as brief as feasible in order to support the expansion of your business.
Data-driven decisions rely on analyzing and using data to make informed choices, leading to better outcomes and strategies, while minimizing guesswork and assumptions.
When clients pay less in subscription fees than the previous month, it results in a decrease in monthly recurring revenue (MRR).
In general, investment securities that offer fixed interest or dividend payments to investors until their maturity date are referred to as having fixed income. Investors receive their principal investment back when the investment reaches maturity. Bonds issued by governments and corporations are the most popular fixed-income vehicles.
The cash that a corporation generates after deducting cash outflows for operating expenses and capital asset maintenance is known as free cash flow (FCF). Free cash flow, as opposed to earnings or net income, is a metric of profitability that takes into account both changes in working capital from the balance sheet as well as spending on assets and equipment. It also eliminates non-cash expenses from the income statement.
The World Association of Risk Professionals has granted the professional designation of "financial risk manager" (FRM) (GARP). The GARP FRM accreditation is acknowledged across the world as the top credential for individuals working in the financial risk industry. Candidates must successfully complete two challenging exams and operate in the field of risk management for two years in order to receive the FRM certification.
Fair market value (FMV) is the amount that a product would sell for on the open market if both the buyer and the seller were acting in their own best interests, were not subjected to excessive pressure, and were given a reasonable amount of time to complete the transaction.
The total monetary or market worth of all the finished goods and services produced within a nation's boundaries during a certain time period is known as the gross domestic product (GDP). It serves as a thorough assessment of the state of the economy in a particular nation because it is a wide indicator of total domestic production.
The Gordon Growth Model (GGM) is a method used to estimate a stock's intrinsic value based on a sequence of future dividends that will increase at a steady rate. It is a well-liked and uncomplicated variation of the dividend discount model (DDM). The GGM solves for the present value of the infinite sequence of future dividends under the assumption that dividends rise at a constant rate in perpetuity.
After subtracting the cost of goods sold, a company's earnings are known as its gross profit (COGS). In other words, it's the money you keep after paying all the expenses associated with creating and offering your good or service for sale. Your operating costs are not taken into account in your gross profit, nevertheless.
Net sales revenue less cost of goods sold is your company's gross margin (COGS). Simply put, it's the money left over after all expenses associated with producing and distributing your good or service have been paid.
G&A costs make up a sizable component of a business's overall operating costs and have an effect on your bottom line without being connected to any one department or function. G&A expenditures are typically fixed costs, and many companies want to keep them as low as possible because they don't directly affect sales or profits (like sales, product development, etc.).
In financial analysis, the internal rate of return (IRR) is a statistic used to calculate the profitability of possible investments. IRR is a discount rate that, in a discounted cash flow analysis, reduces all cash flows' net present values (NPV) to zero.
Key performance indicators (KPIs) are a group of quantitative metrics used to assess the overall long-term performance of an organization. KPIs in particular aid in determining a company's strategic, financial, and operational accomplishments, particularly when compared to those of rival companies in the same industry.
Outsourcing of fundamental, information-related corporate tasks is known as knowledge process outsourcing (KPO). KPO involves hiring people with advanced degrees and specialized knowledge to perform work under contract.
Key rate duration quantifies the change in value of a debt security or a portfolio of debt instruments, typically bonds, throughout the whole yield curve at a particular maturity point.
Your LTV:CAC ratio is a technique to quantify the relationship between the lifetime value (LTV) of a client (i.e., the amount they spend before they churn) and the cost of acquiring them. Because subscription-based businesses depend on client retention rather than a stream of one-time sales to expand, they are the main users of this statistic.
The proportion of leads that become actual clients who will pay you is known as your lead conversion rate. Your lead conversion rate can be broken out into many categories based on marketing source, campaign, lead stage, and other factors, similar to other marketing metrics like Cost Per Lead (CPL).
The term "mergers and acquisitions" (M&A) refers to the merging of businesses or their key financial assets through business-to-business financial transactions. A business can completely buy out and absorb another business, combine with it to form a new business, take over some or all of its key assets, make a tender offer for its stock, or launch a hostile takeover. They are all M&A activities.
A publicly traded limited partnership known as a master limited partnership (MLP) is a commercial endeavor. It combines the financial flexibility of a publicly listed corporation with the tax advantages of a private partnership.
The amount of MRR lost as a result of downgrades or cancellations from your customers during a specific period of time is referred to as MRR Churn, also known as Churn MRR or Revenue Churn. MRR churn is calculated monthly in the same manner as MRR and is often displayed as a percentage (MRR churn rate).
The amount of predictable monthly revenue that your company receives from customers is known as monthly recurring revenue, or MRR. MRR, then, is the total sum of money you anticipate receiving from customers each month in exchange for their subscription to your service.
MQLs, as the name implies, are leads that have been examined and qualified by the marketing team, either manually (a team member examines each lead as it enters the pipeline) or automatically (your CRM system triggers the qualification based on certain criteria).
The net asset value of an investment fund is calculated by dividing the number of outstanding shares by the net value of the fund's assets less its liabilities. The price at which the shares of funds registered with the U.S. Securities and Exchange Commission (SEC) are traded is referred to as the NAV most frequently when discussing mutual funds or exchange-traded funds (ETFs).
A formula known as net operating income (NOI) is used to assess the profitability of real estate assets that produce income. NOI is the sum of all property revenues less all running costs that are deemed to be reasonably reasonable.
The amount of new MRR is the MRR added from new clients. While Monthly Recurring Revenue (MRR) includes all predictable monthly revenue generated by all of your customers, new MRR focuses more intently on the MRR generated by the new customers you added that month.
When additional revenue from existing customers (expanding MRR) exceeds the amount of money you lost from cancellations and downgrades, this is referred to as negative churn, also known as net negative revenue churn or negative revenue churn (churned MRR).
The Federal Reserve's purchases and sales of assets on the open market are referred to as "open market operations" (OMOs) (Fed). The Fed runs open market operations to control the amount of money held in reserve by US banks. Treasury securities are bought by the Fed to boost the money supply and sold to decrease it.
Operational profit is the amount left over after operating costs and cost of goods sold (COGS). EBIT is another name for it (earnings before interest and taxes). The fact that many businesses track both operational profit and gross profit is significant.
The price/earnings to growth ratio (PEG ratio) is calculated by dividing a stock's price-to-earnings (P/E) ratio by the earnings growth rate over a given time period.
The ratio for valuing a firm that compares its current share price to its earnings per share is called the price-to-earnings ratio (EPS). The price multiple or earnings multiple are other names for the price-to-earnings ratio.
A financial statement known as a profit and loss (P&L) statement provides an overview of the revenues, expenditures, and expenses incurred for a given time period, typically a quarter or fiscal year. These documents reveal if a business can produce profit by raising sales, cutting expenses, or doing both. P&L statements are frequently displayed using the cash or accrual method. P&L statements are used by investors and corporate managers to assess a company's financial condition.
The Rule of 40 evaluates how successfully a company combines profitability and recurring revenue growth. Generally speaking, when the growth rate plus profitability is at or above 40, the indicator denotes "excellent" performance.
Although it goes by a variety of names, including yearly run rate, sales run rate, and annual revenue run rate, revenue run rate is simply a way to forecast future income over a longer period of time.
The percentage of your revenue that is kept over a specific time period is known as revenue retention. For consistency with your monthly recurring revenue, it is typically measured monthly (MRR).
Companies utilize the calculation "revenue per employee" to determine how much money each employee brings in for the company. This formula divides the number of current employees by the total revenue over the previous 12 months. The end result is an average value per individual that accounts for a portion of the overall revenue.
The percentage of monthly recurring revenue (MRR) that your business lost due to downgrades and cancellations during a specific period of time is known as revenue churn, also referred to as MRR churn. Usually, a monthly calculation is used.
R&D costs are, to put it simply, all expenses incurred during the research and development of your good or service, as well as any intellectual property (IP) created during this process, such as patents and copyrights.
The phrase "stock market" describes a number of marketplaces where shares of publicly traded firms can be purchased and sold. Such financial transactions take place on official exchanges and in over-the-counter (OTC) markets that adhere to a predetermined set of rules.
A lead that has undergone due diligence and is prepared to meet with the sales team as someone who is very interested in acquiring your good or service is known as a sales qualified lead (SQL). Because they are much more likely to become customers than marketing qualified leads, sales teams see SQLs as high-value leads.
The internal and external costs incurred that are directly or indirectly related to selling and marketing a good or service are known as sales and marketing expenditures. All sales and marketing staff wages, money spent on marketing initiatives (sponsorships, trade fairs, display ads, etc.), and any platforms or technologies used to support marketing and sales operations are included in these costs.
The SaaS Quick Ratio compares the amount of monthly recurring revenue (MRR) gained from new customers and business expansion against the MRR lost from contracting and churning. Although there are many elements that could alter this benchmark, it is frequently believed that a number of 4 or more is desirable for early stage enterprises.
The SaaS Magic number is a metric for sales effectiveness that compares sales and marketing costs over the same three months to the most recent three months of recurring revenue growth multiplied by four (to approximate annual revenue growth).
Total shareholder return (TSR) is a metric of financial performance that identifies the total profit an investor makes from a particular investment, in this case shares of stock or equities. TSR includes special distributions, stock splits, and warrants when calculating its total, which is typically represented as a percentage. It also includes capital gains and dividends from a stock. TSR, regardless of how it is calculated, refers to the total amount that a stock has returned to investors.
TTM revenue is the total sum of all of a company's sales over the previous twelve months. In other words, it is a further method of determining revenue (along with MRR, ARR, total revenue, the list goes on).
The sum of your recurring (MRR) and non-recurring revenue sources is your total revenue, commonly referred to as gross revenue.
Venture capital (VC) is a sort of private equity and financing provided by investors to start-up enterprises and small businesses with the potential for long-term growth. The majority of venture capital is often provided by wealthy individuals, investment banks, and other financial organizations.
An intraday chart technical analysis indicator that resets at the beginning of each new trading session is the volume-weighted average price (VWAP). It is a benchmark for trading that shows the daily average price at which a security has traded in terms of both volume and price.
Zero-based budgeting (ZBB) is a method of planning a budget in which each new period's spending must be supported. Beginning with a "zero foundation," every function inside an organization is examined for its needs and expenditures as part of the zero-based budgeting process. Then, regardless of whether each budget is bigger or smaller than the previous one, the budgets are constructed around what will be required for the following term.
