MIS & Reporting for SAAS Companies

Financial Metrics and Reporting:

Metrics tracked monthly:
• Revenue related-
✔ ACV (Annual Contract Value over 12 months) and TCV (Contract Value of
signed contracts with >1 year duration)
✔ Annual recurring revenue (ARR)
✔ Committed AR (CARR) / Next 12 months (NTM) ARR
✔ Ratios
• Revenue model (Scenario modelling)
• Customer-wise revenue Build-up (cohorts) by
✔ Contract Size / ARR
✔ Geography
✔ Product
✔ Industry
Key ratios
Ratio Formula Indication
Gross Margin % Gross Margin/Revenue Indicates revenue company generates after it
recovers its direct cost
Churn Ratio Customer Churn / Opening Indicates % of clients churned as against total
(# & Value) clients (basis # of Cust & MRR churned)
Gross Revenue [Starting ARR - Churn ARR] / Indicates revenue retained from existing
Retention (GRR) Starting ARR customers after excluding churn
Net Revenue Retention Starting ARR + (Upsell, Price Indicates upsell & expansion generated from
(NRR) incr - churn) / Starting ARR existing customers after excluding churn
Average Annual ARR / Total number of Indicates average revenue per customer
Contract Value (Avg. customers
ACV)
Life-time value (LTV)/ [(ACV * GM%) / Churn Indicates value of a customer over their
Customer Acquisition Ratio]/ CAC lifetime, compared to cost of acquiring them
cost (CAC)

CAC Payback CAC/ (Incremental Rev * Indicates time taken by company to recover
GP%) the Customer acquisition cost (with Qtr lag)
Key ratios
Ratio Formula Indication
Sales Efficiency Incremental CARR / S&M Incremental Revenue booked by incurring
Cost S&M costs (lag wrt Enterprise / SME Cust)

Capital Efficiency Incremental CARR (or ARR) Incremental Revenue booked / earned by
/ Gross Burn spending capital

Runway Cash Available / Indicates # months company can survive

Normalized Net Burn without fresh funding*

LFL Growth (YoY)

- Existing customers Closing ARR / Opening ARR Indicates growth in value from existing and
- New customers at customer level new customers

* Advisable to back this up with detailed scenario analysis of Base, Bear and Best Case to have a more detailed handle on the runway basis
monthly unlevered cash flows
Other Reporting Items
Head Indication
Cash Balance End of the month Cash Balance

Receivables / Receivable Receivables end of the month and Receivables Cycle

Days

Cohorts Typically reported at the end of each quarter. Select the

cohort that is most representative of your business, eg:

1. Contract Size (say $25k & above, $50k - $100k, $100k and
above)

2. Products (in case you have multiple products launched

and clocking revenues)

3. Geographies (most relevant to your business)

Revenue Modeling and Build-Up

Multiple revenue streamlines projections are created (Bear, Base, Best etc) and
for each of these cases a revenue forecast is arrived at, primarily based on:

• Existing Business - Existing Customer Contract Values and expected Growth

• New Business - Pipeline * Conversion Rate

(Conversion rates could be different for different cohorts - use cohorts most
relevant to your business - eg: Product / Customer Size, etc.)
Illustrative Cohort Progression
 Budgeting
What & Why?
Budgeting is a major part of the Finance function and a key control objective for the
organization
How?
• Firstly identify the Major cost heads of the organization. Typically for a SaaS
company it would be Hosting, Employee cost & Subscriptions
• One month prior to the start if the financial year, a meeting with all the
stakeholders/Head of functions to reflect on the Upcoming year
• A budget Sheet designed and sent to all respective department heads for them to
provide a first cut estimated Budget
• Finance to have a discussion with them to identify the critical items in the Budget
and the avoidable ones based on the organizations outlook
• Final Budget sheet circulated, and the same to be monitored on monthly basis
Cost Optimization
Process:

Analyze each line item of department costs and discuss with heads
• Optimize number of users (e.g G Suite)
• Evaluate need for tool
• Whether enterprise license is required or we can downgrade to Business
license (e.g G-Suite / Google Maps) still meeting operation needs
• Re-negotiate pricing terms to have discounts/one-time credits
• Re-negotiate credit terms to better manage cash flows
Formulating better alternatives w.r.t Vendor and services
Creating internal bandwidth within teams to transit into a self reliant system
than a consultant/Vendor (Recruitments/Accounting/Tax Queries etc)
Quarterly metrics
Product:

List down initiatives planned & Business impact (product level), for e.g.
1. Change in view/ design – to make it more scalable / bring stability
2. Less reliance on an external feature
3. New concept/feature / new product focus
4. GTM in case of new product launches

Current Quarter - Hits / Misses with Reasons & Plan going forward
Next 2 Quarters - Plan and Critical Performance indicators
Quarterly metrics
Sales:

Pipeline, CARR & ARR for 4 Quarters - last, current & next 2 quarters
Sales Pipeline
By Channel - Marketing / Sales outbound / Partnerships
By Stage – Qualified Vs Advanced (in each region)
Top 5 customer prospects- Updates on the last quarter’s prospects and their
current stage plus the top 5 prospects of current quarter
Highlights / lowlights for each region
New initiatives
Metric - Sales team productivity
Quarterly metrics
Customer Success:

Revenue growth across customers and top 5 customers contribution to total

(Specific evaluation of customer concentration)
Key Accounts Expansion history - Revenue growth over years, Customer success
story
Revenue Split by Region, Product, Customer type
Rev #’s - Actual of last 2 Qtrs, Proj Vs actual for current Qtr and projections for
next 2 quarters
Scenario modelling - Key Metrics
Internal Metric
10x4 view of PL Prod 1 Prod 2 Prod 3 Prod 4
Org / BU Particulars
Region 1 Region 2 Region 3 Region 4
Rev
Tech Revenue
Gives a bird’s eye
Corp
view of the entire
PL for each BU / Direct Cost
Cost centre (CC) and Gross Margin
location
Operating Expenses
Every employee and EBITDA
tool is mapped to a
Depreciation
CC for effective
Budgeting & Interest expense
monitoring Operating Profit / Loss
One-time exps & Taxes
Net Income / Loss
Q&A