SaaS metrics that actually matter: MRR, churn, and burn multiple
Revenue alone hides more than it reveals in a subscription business. The four numbers that tell you whether the machine is actually working.
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The four numbers that tell your SaaS story
Revenue alone hides more than it reveals in a subscription business. These four metrics tell you whether the machine is actually working.
1. MRR (and its movement)
Monthly recurring revenue is the base, but the movement matters more: new, expansion, contraction, and churned MRR. Net new MRR = new + expansion − contraction − churn. That single number is your growth engine's output.
2. Churn (revenue, not just logo)
Losing a $5k/mo customer and a $200/mo customer are not the same event. Track revenue churn, not just how many logos left. Best-in-class SaaS at your stage runs low single-digit monthly revenue churn.
3. Net revenue retention (NRR)
Take a cohort of customers, ignore new sales, and ask: is that group spending more or less than a year ago? NRR above 100% means you'd grow even if you never signed another customer. It's the metric investors obsess over.
4. Burn multiple
Net burn ÷ net new ARR. It answers: how many dollars are you burning to add one dollar of recurring revenue? Under 1x is elite; over 2x means growth is getting expensive.
Why deferred revenue trips everyone up
Annual prepayments hit the bank now but are earned over 12 months. Book it wrong and your revenue looks lumpy and your margins lie. This is exactly where SaaS-literate finance earns its keep.
