Your SlideShare is downloading. ×
0
Financial Considerations for SaaS Companies
Financial Considerations for SaaS Companies
Financial Considerations for SaaS Companies
Financial Considerations for SaaS Companies
Financial Considerations for SaaS Companies
Financial Considerations for SaaS Companies
Financial Considerations for SaaS Companies
Financial Considerations for SaaS Companies
Financial Considerations for SaaS Companies
Financial Considerations for SaaS Companies
Financial Considerations for SaaS Companies
Financial Considerations for SaaS Companies
Financial Considerations for SaaS Companies
Financial Considerations for SaaS Companies
Financial Considerations for SaaS Companies
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Financial Considerations for SaaS Companies

519

Published on

Chad Varra, CFO of SendGrid, leads a discussion with members of the Boulder and Denver Software Clubs. These slides show some of the numbers and concepts to which Chad spoke.

Chad Varra, CFO of SendGrid, leads a discussion with members of the Boulder and Denver Software Clubs. These slides show some of the numbers and concepts to which Chad spoke.

Published in: Business, Technology
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
519
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
11
Comments
0
Likes
1
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Software Club – SaaS Series<br />Finance – Chad Varra<br />SendGrid, Inc.<br />
  • 2.
  • 3.
  • 4.
  • 5. Measuring Growth<br />Monthly Recurring Revenue (MRR)<br />Customers<br />
  • 6.
  • 7. MRR = Monthly Recurring Revenue<br />JanuaryFebruary<br />Beginning MRR $1,000 $1,275<br />New MRR 250 300<br />Increased MRR 100 100<br />Lost MRR (50) (60)<br />Decrease MRR (25)(20)<br />Ending MRR $1,275 $1,595<br />
  • 8. Customer Count<br />JanuaryFebruary<br />Beg Customer Count 5,000 5,130<br />New Customers 150 200<br />Lost Customers _(20)_ _(25)<br />Ending Customer Count 5,130 5,305<br />Increase Customers 75 75<br />Decrease Customers (10) (10)<br />
  • 9.
  • 10. Customer Acquisition Cost (CAC)<br />What does it cost to acquire a customer?<br />How many months of MRR does it take to recover your costs of acquiring that customer?<br />
  • 11. CAC = (Sales + Marketing +Deploy Costs)<br /> # of Deals Closed<br />Sales Costs = $100,000<br />Marketing Costs = $150,000<br /># of Deals Closed = 600<br />$100,000 + $150,000 = $416 CAC<br /> 600<br />
  • 12. How long does it take to recover the CAC?<br />Payback Period = CAC/MRR per Customer<br />Average MRR Per Customer = $100<br />$416/$100 = 4.16 months<br />Rule of thumb: 12 months or less is good.<br />
  • 13. Lifetime Value of Customer<br />(Average Lifetime of a Customer * MRR/Cust)<br /> - Cost of Revenue<br />- CAC <br /> = Lifetime Value of Customer<br />Lifetime of Customer = 36 mths 24 mths<br />MRR per Customer = $100 $100<br />Margin = 80% 80% <br />CAC = $416 (4.16 mth payback) $1,600 (16 mth payback) <br />(36*$100)-$720-$416 = $2,464 (24*$100)-$480-$1,600 = $320<br />Rule of thumb: LTV that is greater than 3x CAC is good<br />
  • 14. Churn<br />
  • 15. So What Are Your Levers<br />Increase MRR per customer<br />Increase Customers<br />Manage CAC<br />Increase LTV<br />Decrease Churn<br />

×