There are several financial metrics that are crucial for CFOs of Software and SaaS (software as a service) companies to track. Recently I attended Advantage, Intacct’s annual customer conference, where according to a panel of five CFOs from leading SaaS-based companies from around the country, these metrics are key to their business.
Bookings are monthly data typically collected from CRM or sales systems, such as Salesforce.com. This metric usually encompasses items, such as new contracts, renewals, add-ons, refunds, upgrades and downgrades. CFOs measure bookings as a way to understand and guide their businesses forward.
Monthly Recurring Revenue (MRR)
Monthly Recurring Revenue (MRR) is a core operating metric which measures the monthly predictability of your revenue model. This data is key to CFOs of SaaS companies because it focuses on the normalized revenues estimate of your monthly revenue rather than reported revenue.
Customer Acquisition Cost (CAC)
Customer Acquisition Cost (CAC) is an important business metric because it essentially measures the cost of adding a new client from the overall sales and marketing spend. CFOs track CAC as it helps to determine how much in resources a company can profitably spend to acquire a customer.
The Resource Group
By Brady Curtis, The Resource Group