Run your business like it’s for sale. Run your business as if no one wanted your business. Your hear opinions on all sides about preparing your business for a fundraise or exit. What doesn’t change? You need data and metrics to scale your business. By putting data and metrics in place, you serve two purposes. […]| The SaaS CFO
What should I include in SaaS cost of goods sold (COGS)? This is a very common question from SaaS founders and finance teams. It’s also an important question and something that you need to get right. The proper coding of SaaS COGS versus operating expenses (OpEx) is important for many reasons. First, we must understand …| The SaaS CFO
I’ve been poring through public financial documents looking for ARR definitions and calculations. I could not find one pure-play usage company that defines ARR. If these companies don’t define ARR, what metrics do they track? In this post, I’ll walk you through the top financial metrics that usage-based companies track and disclose, why those metrics […] The post Top Financial Metrics Tracked by Usage-based Companies appeared first on The SaaS CFO.| The SaaS CFO
Defining and calculating ARR is a hot topic. I have been talking to a lot of SaaS founders and finance leaders about how to properly calculate annual recurring revenue. Not too easy with today’s pricing and business models. The shift in pricing models (usage, consumption, outcome-based) has made the lives of tech CFO’s more difficult. […] The post How to Define and Calculate ARR appeared first on The SaaS CFO.| The SaaS CFO
How do leading SaaS companies define ARR? Especially as AI and usage-based pricing models reshape recurring revenue in SaaS? In this post, I break down how Verint, a CX automation leader, defines both Subscription ARR and AI ARR, and how they model these metrics internally for cash flow, investor reporting, and product strategy. I did […] The post AI ARR vs. SaaS ARR: How to Define and Calculate appeared first on The SaaS CFO.| The SaaS CFO
You can’t manage a SaaS business by only using the standard financial statements. To really understand the underlying economics of your business, you must have a properly structured “software” or SaaS P&L (Profit and Loss Statement). You must also calculate the relevant SaaS metrics and margins for your business. The SaaS P&L Explained “infographic” below …| The SaaS CFO
The SaaS P&L is critical to the management of your SaaS business. I talk about the SaaS P&L (profit and loss statement) almost every week with SaaS founders, finance, and accounting teams. At this point, I’ve reviewed hundreds of SaaS P&Ls (also called an income statement). I’d say about 90% of them are structured incorrectly, …| The SaaS CFO
Scaling a SaaS business sounds great—more logos, more revenue, better valuation. But there are three metrics that will determine if you have the potential to scale and if you are scaling versus growing. These aren’t vanity metrics. You are swimming upstream if these metrics are not improving. Looking for a path to profitability? Start calculating […] The post The Power 3 SaaS Metrics That Predict If You’ll Scale or Stall appeared first on The SaaS CFO.| The SaaS CFO
If you work in SaaS finance, you can’t get away from ASC606 and revenue recognition. Understanding ASC 606 is essential for SaaS finance professionals—whether you’re a CFO, controller, FP&A analyst, or accountant. In a recent No Fluff webinar, I hosted revenue recognition expert Jill Hauck. We dove into practical applications of ASC 606 for SaaS […] The post Mastering ASC 606: SaaS Revenue Recognition Essentials for Finance Leaders appeared first on The SaaS CFO.| The SaaS CFO
One of the most critical aspects of SaaS financial management is having clear and distinct revenue streams. A well-structured SaaS P&L provides fundamental data for analyzing margins, operational efficiency, and business health. However, many SaaS companies do a poor job of clearly defining their revenue streams. This has major impacts on how you manage your […] The post The SaaS Revenue Hierarchy: Why Defining Your Revenue Streams Matter appeared first on The SaaS CFO.| The SaaS CFO
I have worked in finance and accounting for 25+ years. I've been a SaaS CFO for 8+ years and began my career in the FP&A function. I hold an active Tennessee CPA license and earned my undergraduate degree from the University of Colorado at Boulder and MBA from the University of Iowa.| The SaaS CFO
There are many financial metrics that I calculate and review each month, and this includes my SaaS gross margin. Of course, it’s not just your overall gross margin that is important. You must also calculate and understand gross margins for each of your revenue streams. Depending on your business model, these revenue streams may include …| The SaaS CFO
The high-flying times of 2021 are over, but it doesn’t mean you can’t be successful in software M&A. If you have a SaaS business performing well financially, you can still get funded and/or exit for nice ARR multiples. I recently sat down with Jim Williams, Managing Director at GLC Advisors, to discuss the current state […] The post Software M&A Trends for 2025: Insights from GLC Advisors appeared first on The SaaS CFO.| The SaaS CFO
Sales compensation plans play a critical role in the success and scaling of SaaS companies. The transition from founder-led sales to scalable, team-driven sales models can be challenging. The transition can stop companies from hitting the next level of ARR. Higher ARR, higher valuation. A well-designed sales compensation plan motivates teams, aligns with corporate objectives, […] The post How to Create a Sales Compensation Plan for SaaS appeared first on The SaaS CFO.| The SaaS CFO
Achieving a $100 (or pick your number) million SaaS exit isn’t just about revenue milestones or growth rates. Of course, that’s very important. It’s also about the “boring” stuff. You must ensure your business is legally sound and prepared for the rigorous scrutiny of buyers. In a recent webinar, I hosted legal expert Omeed Tabiei. […] The post Why Legal Readiness Can Make or Break Your SaaS Exit appeared first on The SaaS CFO.| The SaaS CFO
Net dollar retention measures the amount of revenue that you keep and expand in your existing customer base. Net dollar retention (NDR) along with gross dollar retention (GDR) have become popular metrics in the valuation world. Retention is Pillar 2 of my 5 Pillar SaaS Metrics Framework. Retention is critical to track, monitor, and improve …| The SaaS CFO
Gross dollar retention measures the amount of revenue that you keep from your existing customer base. Gross dollar retention (GDR) along with net dollar retention (NDR) are critical metrics for SaaS operators and investors. Gross dollar retention is also known as gross revenue retention (GRR). As operators of our SaaS businesses, it’s critical to track, …| The SaaS CFO
The path to financial transparency requires a strict, monthly data routine. One of the reports that contributes to this routine is the software bookings report. And it’s one of the biggest data mistakes that I see in SaaS. Without solid bookings data, we cannot track the performance of our sales team, forecast revenue accurately, and …| The SaaS CFO
MRR, or monthly recurring revenue, is the life of a SaaS business. It’s essential data to manage and improve your business. And the MRR schedule is one of the most requested data items in due diligence. The SaaS MRR schedule, or sometimes called the MRR waterfall, is the source of key SaaS metrics. It’s also …| The SaaS CFO
