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The key SaaS metrics that matter to smb owners

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In this webinar, Founder of SaaSOptics, David Ryan and Investment Director of Lighter Capital, Branden Harper will walk you through:

- Why you should track subscription metrics
- The 5 principles of SaaS analytics
- Key metrics to focus depending on your business models and stages

Published in: Technology
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The key SaaS metrics that matter to smb owners

  1. 1. LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015 Top SaaS Metrics That Matter to SMB Owners
  2. 2. LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015 p2 Branden Harper Director of Lighter Capital +10 years financing early stage tech companies, either as an entrepreneur or investor. Over $50M raised or invested Today’s Speakers David Ryan Founder of SaaSOptics A serial early-stage entrepreneur with 20+ years of experience. Built 8 companies that span the spectrum of enterprise and SaaS.
  3. 3. LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015 › Founded in 2009 › 150+ SaaS customers › $880 MM in TTM revenue Trusted by: About SaaSOptics
  4. 4. LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015 › Mission: make fundraising process more efficient utilizing technology and alternative structures › Funded +80 tech companies: Most active revenue-based finance lender in the country › $50K-$1M in growth capital, including making key hires, product development and sales/marketing initiatives › Entrepreneur-aligned structure About Lighter Capital
  5. 5. LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015 Today’sAgenda Why track subscription metrics? The 5 Principles of SaaS Analytics Key metrics you should focus on and how they apply towards different business models and stages p5
  6. 6. LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015 p6 Subscription Metrics & Terminology The Big 5 MRR Family (MRR. CMRR, ARR/ACV) Churn CAC Cohorts CLV
  7. 7. LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015 p7 Why Subscription Metrics? Reason 1: Traditional financial reports don’t tell the whole story Reason 2: For better operating decisions: Income Statement Balance Sheet GAAP MRR CLV Metrics Pricing Packaging Development Compensation
  8. 8. LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015 p8 The 5 Principles SaaSAnalytics 1. There are no rules 2. You make the rules 3. You must speak “subscription metrics” to speak with the capital markets 4. Analyze by segmentation 5. Know your subscription business model
  9. 9. LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015 p9 Which ModelAre You B2C High Transaction Volume Low Transaction Price Unassisted Buying Click Acceptance Monthly Credit Card Payments B2B Low Transaction Volume High Transaction Price Selling Negotiated Agreement Checks/ACH/Wires
  10. 10. LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015 p10 Where are you? Self-Funded Angel Investors Series A Series B Series C
  11. 11. LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015 p11 #1 - MRR ‣ MRR= Monthly Recurring Revenue ‣ But, MRR is not “revenue.” It is a “normalized approximation” of revenue ‣ MRR figures into almost all subscription metrics and analysis, so you must track it granularly and accurately! ‣ Know the elements of your MRR
  12. 12. LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015 p12 MRR Variants ‣ CMRR= Committed Monthly Recurring Revenue ‣ Use when this is a gap between contract execution and subscription start date ‣ B2B Only ‣ ARR= Annual Recurring Revenue and = 12x MRR ‣ B2B Only
  13. 13. LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015 p13 #2 Churn ‣ Churn = what is lost ‣ Customers lost ‣ MRR/ARR lost ‣ Reported in whole numbers ‣ Reported in ratios ‣ Speaks to sustainability and company valuation
  14. 14. LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015 p14 Customer Churn & MRR Drive Valuations! ‣ Average Customer Lifetime Value = Average MRR X Gross Margin / Customer Churn Rate + Monthly Discount Rate ‣ Total Lifetime Value = Average Customer Lifetime Value x Customer Count End of Period
  15. 15. LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015 p15 #3 Cohort ‣ A Cohort is a “like group” ‣ Cohort analysis provides a sense of relative performance across different groups ‣ In subscriptions, the cohort is usually the month the customer was acquired, but a cohort can be any meaningful group ‣ Industry can be a cohort!
  16. 16. LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015 p16 #4 Customer Lifetime Value (CLV) ‣ Customer Lifetime Value is the estimated value of your existing Customer subscriptions. ‣ Average Customer Lifetime Value = (Average MRR X Gross Margin)/(Customer Churn Rate + Monthly Discount) Rate) ‣ Total Lifetime Value = Average Customer Lifetime Value X Customer Count End of Period ‣ Grows in importance as your business matures #5 CustomerAcquisition Cost (CAC) ‣ CAC = Cost of Acquiring a Customer ‣ Works hand-in-hand with CLV ‣ Grows in importance as your business matures
  17. 17. LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015 p17 Which MetricsAre Important When? Self-Funded Angel Investors Series A Series B Series C Cohort, CAC, CLV MRR, Churn B2B
  18. 18. LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015 p18 Which MetricsAre Important When? Self-Funded Angel Investors Series A Series B Series C Cohort, CAC, CLV MRR, Churn B2C
  19. 19. LIGHTER CAPITAL WEBINAR © COPYRIGHT 2015 How Can We Help? Lighter Capital Provides $50K-$1M growth funding to SaaS companies › Non dilutive › Long-term growth capital › Flexible payments › Can get you funded in 30 days SaaSOptics Complete B2B Subscription Management Software › Subscription Invoicing › Revenue recognition and deferred revenue › Subscription Analytics › Subscription Management Learn more: www.lightercapital.com Contact us: info@lightercapital.com Learn more: www.saasoptics.com Contact us: 678.710.8260

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