SaaSOptics Triage Your Business Webinar...0.97 0.81 1.87 0.9 1.94 3.03 6.61 6.1 5.12 5.64 6.89 4.42...

UsingMetricstoTriageYourSubscriptionBusiness

Welcome- 30Secondsaboutus.

ChrisWeberProductManager,SaaSOptics

Ø FullSubscriptionManagementwith• SaaSFinancials• SaaSMetrics

Ø Over300customersØ Customershavecollectivelyraised~$2BinVCandPEØ Untoldhoursofduediligenceandauditscrutiny

PollingQuestion:

ØWhatisthesizeofyourcompanyinARR?Ifyou’reanoutsourcedCFOorauditor,whatisyouraverageclientsize?q$0- $5MMq$6MM- $10MMq$10- $15MMq$15- $20MMq$20MMplus

Agenda

Ø LimitationoftraditionalfinancialstatementsØ HierarchyofSaaSMetricsØ VanityvsActionableMetricsØ Gettingaheadoftheissue:triagingyourSaaSMetrics

WhySoftwareasaService?

Ø AnnuityStreamØ Lowchurn/highrenewalratesresultinhighcustomerlifetimevaluesØ TypicallyhighgrossmarginØ EfficientR&Dspend

• FocusonSales&Marketing:CustomerAcquisitionCost(CAC)Ø CustomercentricapproachØ Innovative&adaptable

WhySoftwareasaService?

Ø AnnuityStreamØ Lowchurn/highrenewalratesresult

inhighcustomerlifetimevaluesØ TypicallyhighgrossmarginØ EfficientR&Dspend

• FocusonSales&Marketing:CustomerAcquisitionCost(CAC)

Ø CustomercentricapproachØ Innovative&adaptable

KeyFinancialData:

Ø Budget/Projections• Assumptions

Ø HistoricalIncomeStatementØ BalanceSheetØ CashBurnRate&Runway

LimitationsofFinancialStatements

Ø Revenue(P&L)• Reliability• Composition(beyondincomeaccounts)§ New

§ Expansion

§ Contraction

§ Lost

• Momentum§ Trends&Velocities

o CohortAnalysis;customerclass,salesrep,producttype,etc.

BridgingtheGap

Ø CAC:CustomerAcquisitionCostØ LTV:LifetimeValueØ LTV/CACRatioØ CACPaybackPeriodØMagicNumber

ØMRR/ARRGrowthRatesØ SaaSQuickRatioØ Bookings(ACV&TCV)Ø Churn(Logo&$)Ø Expansion&ContractionMRR/ARR

http://www.saasoptics.com/saaspedia

HierarchyofMetrics

15M+ ARR5M - 15M ARR1M – 5M ARR0-1M ARR

Top of Mind

• Invoicing/Billing• Cash• Product Fit

• Initial Funding• Converting to

accrual• Metrics• Renewal Base

• Additional capital requirements

• Revenue Recognition

• Metrics

• Additional capital requirements

• Larger audit engagements

• Advance metrics

HierarchyofMetrics

CAC (Cost to Acquire a Customer) Churn: Dollar & Customer

Lifetime value (LTV)LTV / CAC Ratio

SaaS Quick Ratio Churn Cohort Analysis• Sales Rep• Vertical• Period Won• Term• Item or Item Groups

MRR Cohort Analysis• Sales Rep• Vertical• Period Won• Term• Item or Item Groups

Qty (Seats) Cohort Analysis• Sales Rep• Vertical• Period Won• Term• Item or Item Groups

LTV: Discount Rate Applied

Customer Retention Rate (CRR)

Dollar Retention Rate (DRR)

LTV / CAC RatioCAC Payback Period Expenses /

MRR * Gross Margin / FTEChurn:• Net• Expired• Canceled

Bookings (TCV) MRR / ARR Customer (logo) Count

Backlog Employee CountSubscription Momentum

15M+ ARR5M - 15M ARR1M – 5M ARR0-1M ARR

PollingQuestion:

ØWhatmetricsoranalyticsreportsdoyourun?q Churnandretentionanalysisq CLVq Cohortq SubscriptionMomentumq Noneoftheabove

VanityvsActionableMetricsAug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17

TotalARR 6,028,860 6,676,133 7,867,164 9,116,822 10,013,362 10,329,418 12,143,167 12,813,996 13,160,562 13,410,685 13,798,064 13,859,763CustomerCount 490 526 574 598 658 668 694 722 748 775 810 821

MonthlyCustomerChurnRate 0.95% 0.80% 0.53% 0.51% 0.50% 0.55% 0.56% 0.67% 0.72% 0.70% 0.62% 1.09% PeriodtoPeriodNetGrowthRate 8.13% 8.41% 7.35% 9.13% 4.18% 10.03% 1.52% 3.89% 4.03% 3.60% 3.61% 4.52%

MonthlyARRChurnRate 1.28% 1.32% 2.54% 1.27% 0.86% 1.07% 1.31% 2.26% 0.55% 0.82% 0.40% 3.38% EffectiveARRRetentionRate 112.10% 103.15% 110.62% 111.34% 100.74% 100.66% 114.72% 102.56% 100.11% 99.41% 99.98% 96.67%

AverageARRofNewDeal 12,969 12,366 10,044 14,295 13,592 19,257 10,468 10,906 11,081 9,922 10,853 12,715AverageCLV 108,427 131,682 214,725 251,551 254,021 232,914 259,544 221,849 204,848 204,946 229,693 129,330AverageCAC 111,628 162,162 114,583 280,000 131,148 76,923 39,286 36,364 40,000 36,364 33,333 29,268

CLVtoCACRatio97% 81% 187% 90% 194% 303% 661% 610% 512% 564% 689% 442% 0.97 0.81 1.87 0.9 1.94 3.03 6.61 6.1 5.12 5.64 6.89 4.42

Aug-16

Sep-16

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

TotalARR

Aug-16

Sep-16

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

CustomerCount3.38%

Aug-16

Sep-16

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

MonthlyARRChurn

Aug-16

Sep-16

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

CLV/CACRatio

VanityvsActionableMetricsAug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17

TotalARR 6,028,860 6,676,133 7,867,164 9,116,822 10,013,362 10,329,418 12,143,167 12,813,996 13,160,562 13,410,685 13,798,064 13,859,763CustomerCount 490 526 574 598 658 668 694 722 748 775 810 821

MonthlyCustomerChurnRate 0.95% 0.80% 0.53% 0.51% 0.50% 0.55% 0.56% 0.67% 0.72% 0.70% 0.62% 1.09% PeriodtoPeriodNetGrowthRate 8.13% 8.41% 7.35% 9.13% 4.18% 10.03% 1.52% 3.89% 4.03% 3.60% 3.61% 4.52%

MonthlyARRChurnRate 1.28% 1.32% 2.54% 1.27% 0.86% 1.07% 1.31% 2.26% 0.55% 0.82% 0.40% 3.38%

EffectiveARRRetentionRate 112.10% 103.15% 110.62% 111.34% 100.74% 100.66% 114.72% 102.56% 100.11% 99.41% 99.98% 96.67%

AverageARRofNewDeal 12,969 12,366 10,044 14,295 13,592 19,257 10,468 10,906 11,081 9,922 10,853 12,715AverageCLV 108,427 131,682 214,725 251,551 254,021 232,914 259,544 221,849 204,848 204,946 229,693 129,330AverageCAC 111,628 162,162 114,583 280,000 131,148 76,923 39,286 36,364 40,000 36,364 33,333 29,268

CLVtoCACRatio97% 81% 187% 90% 194% 303% 661% 610% 512% 564% 689% 442% 0.97 0.81 1.87 0.9 1.94 3.03 6.61 6.1 5.12 5.64 6.89 4.42

Aug-16

Sep-16

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

TotalARR

Aug-16

Sep-16

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

CustomerCount3.38%

Aug-16

Sep-16

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

MonthlyARRChurn

Aug-16

Sep-16

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

CLV/CACRatio

Scheduled Billings

ProjectedBillings:

98.5% Renewal Rate

ProjectedBillings:

95% Renewal Rate

$584,502

CashFlowImpact:

TriageYourBusiness

SubscriptionMomentum:

Ability to drill down into these customer records to triage our metrics.

ARRCohortbyOrderDate(Quarter)

ARRCohortbyOrderDate(Quarter)EffectiveARRRetention over

customerlifetime

Changeinretentionovertime

SalesRepCohort:RelativeMonths(ARR)

Ø SmithandChrisWeber:TwoofourlongesttenureandhistoricallyperceivedasourbestrepsareactuallyresponsibleforthemajorityoftheARRchurn.Possiblysellingdealsthatarenotagoodfitandweshouldrevisittheirtraining.Ournewerlessexperiencedrepsappeartobesellingdealsthatcontinuetoexpandupontheir12monthrenewal.

HierarchyofMetrics:Actionable

CAC (Cost to Acquire a Customer) Churn: Dollar & Customer

Lifetime value (LTV)LTV / CAC Ratio

SaaS Quick Ratio Churn Cohort Analysis• Sales Rep• Vertical• Period Won• Term• Item or Item Groups

MRR Cohort Analysis• Sales Rep• Vertical• Period Won• Term• Item or Item Groups

Qty (Seats) Cohort Analysis• Sales Rep• Vertical• Period Won• Term• Item or Item Groups

LTV: Discount Rate Applied

Customer Retention Rate (CRR)

Dollar Retention Rate (DRR)LTV / CAC Ratio

CAC Payback Period Expenses / FTE

MRR * Gross Margin / FTEChurn:• Net• Expired• Canceled

Bookings (TCV) MRR / ARR Customer (logo) Count

Backlog Employee CountSubscription Momentum

$0MM – $100+MM

ChrisWeberProductManager,SaaSOptics

cweber@saasoptics.com

Cloud-basedSubscriptionManagementforGrowingB2BSaaSBusinesses

SaaSOptics Triage Your Business Webinar...0.97 0.81 1.87 0.9 1.94 3.03 6.61 6.1 5.12 5.64 6.89 4.42...

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