📕Glossary
Explore our comprehensive glossary of SaaS KPIs.
*Concept available on Fincome
A
Active*
Status of a subscription that generated billing > €0 in the last period. An active customer has at least one active subscription and no overdue subscription.
Annual Contract Value (ACV)*
The annualized version of ARPA.
ACV is calculated using the following formula:
[ACV] = ARPA x 12
ARPA (average basket)*
The average basket, also called Average Revenue Per User (ARPU) or Average Revenue Per Account (ARPA), corresponds to the average MRR per active subscriber.
It is calculated with the following formula at a given point in time:
[ARPU] = [MRR] ÷ [Number of active subscribers]
Tracking ARPU is a way to assess your ability to sell increasing amounts to your subscribers.
Annual Recurring Revenue (ARR)*
The predictable recurring revenue to be earned from active subscriptions over the next twelve months. ARR is calculated using the following formula: [ARR] = MRR x 12
ARR / FTEs (Full-Time Equivalents)
Annualized recurring revenue per employee. SaaS benchmark: €100–150k per FTE for growing companies.
[ARR/FTEs] = [ARR] ÷ Number of employees [FTEs]
Attrition (Churn)*
Loss of MRR related to the cancellation of a customer's last active subscription (see "Churn Rate").
Average Sales Cycle
Average duration between opportunity opening and signing. In SaaS SMB: 60-90 days; Mid Market: 3-5 months
[Average Sales Cycle] = [Total days to close all deals] ÷ [number of closed deals]
B
Burn rate
Net cash consumption per month
The Burn rate is calculated using the following formula:
[Burn rate] = [Total monthly cash outflow] - [Total monthly cash inflow]
Burn multiple
Indicator that measures how much a company burns relative to its growth.
Value ≤ 2 considered healthy during growth periods
Burn multiple = Net cash burn ÷ Net new ARRC
Customer Acquisition Cost (CAC)*
The cost to acquire a customer (CAC) is the sum of all costs related to acquiring a new customer, divided by the number of customers acquired in the observed period.
It is a measure of the efficiency of your customer acquisition and a key factor in your profitability (it is generally compared to customers' Lifetime Value (LTV)).
It is calculated based on the following formula:
[CAC over a given period] = [Sum of marketing and sales expenses over the period] ÷ [Number of new customers over the period]
The default period is 3 months, which smooths the evolution of monthly expenses.
CAC Payback Period*
The CAC payback period is the number of subscription months required to recoup the costs related to acquiring a customer.
The formula to calculate the payback period for a given month is as follows: [CAC payback period] = [total costs related to acquiring new customers over the observed period] ÷ [MRR of customers acquired over the observed period]
Retention campaigns
Targeted action aimed at preventing churn; Fincome offers export of "at risk" segments
CMRR (Committed MRR)*
Current MRR ± future movements already contracted (ramp ups, future churns), for a forward-looking view.
Contraction (Downsell)*
Decrease in MRR without complete cancellation. It can be caused by:
A volume reduction (e.g., fewer users)
A decrease in unit price
A discount applied to an existing subscription
Customer count growth*
Decomposing customer count growth helps you understand how your customer base evolves over a given period.
This visualization breaks down the evolution of your customer base into:
Gain: new customers acquired during the observed period
Reactivation: customers reactivated during the observed period
Churn: customers lost due to unsubscribing
Canceled customer*
Customer whose all subscriptions have expired or been canceled, and whose MRR has fallen to 0
D
Currency*
Multi-currency aggregation into the target currency. Fincome allows aggregating revenues in a target currency, with automatic adjustment according to exchange rates for multi-currency subscriptions (source: Open Exchange Rate)
E
Expansion (Upsell)*
Increase in MRR related to an existing subscription. It can come from:
Adding users or modules (volume expansion)
An increase in unit price (price expansion),
· The end of a discount.
F
FX (foreign exchange effect)*
Variation in MRR related to exchange rate fluctuations. This movement is isolated in Fincome so as not to distort operational analysis.
G
GRR (Gross Revenue Retention)*
Gross retention rate. It is the amount of money a company retains from its current customers. Gross Revenue Retention does not take into account MRR from upsells in its calculation; therefore it is capped at 100%.
GRR is calculated using the following formula:
[GRR] = ([MRR at period start] - [Downsell] - [Churn]) ÷ [MRR at period start]
L
Lifetime Value (LTV)*
Lifetime Value (LTV) or Customer Lifetime Value is the estimated amount a customer will spend on your product over the total anticipated duration of their subscription (renewals included).
It allows you to estimate the total value of each subscriber based on the revenue they will generate over their "lifetime."
Since the total expected duration of a customer's subscription is generally difficult to observe, LTV is estimated using ARPU and your customers' churn rate.
To determine LTV, we use the following formula at a given time:
[LTV] = [ARPU] ÷ [average churn rate over the last 6 months]
LTV/CAC*
The LTV/CAC ratio compares a customer's lifetime value to the cost of acquiring them. The higher the ratio, the more a given customer generates long-term revenue above their CAC and the higher your direct profitability (i.e., direct costs).
As a rule of thumb, a ratio greater than or equal to 3x is considered an indicator of a sustainable business model.
LVR (Lead Velocity Rate)
The lead velocity rate measures the monthly growth of qualified leads entering the pipeline, predicting future sales potential and ensuring that marketing efforts generate sufficient demand for sustainable revenue growth. A high LVR indicates strong expansion at the top of the funnel and consistent pipeline growth.
LVR is calculated using the following formula:
[LVR] = ([qualified leads this month] - [qualified leads last month]) ÷ [qualified leads last month] x 100
M
Monthly Recurring Revenue (MRR)*
Monthly Recurring Revenue (MRR) is the predictable recurring revenue that will be generated by your active subscriptions during the next month.
As its name suggests, MRR takes into account the average amount of each subscription normalized over a monthly period. For example, an annual subscription with a total amount of €1,200 results in a €100 contribution to MRR.
MRR is calculated using the following formula:
[MRR] = [number of active subscriptions] x [average subscription amount normalized to a monthly period]MRR can also be translated into an annual view, also called annual recurring revenue (ARR), which is the predictable recurring revenue to be earned from active subscriptions over the next twelve months. ARR is calculated using the following formula:
[ARR] = MRR * 12
Future MRR*
Projection of MRR for the coming months, calculated from active and planned subscriptions. Used to visualize the revenue trajectory in case of already scheduled changes.
Gross margin
Reflection of the percentage of revenue that exceeds the cost of goods sold (COGS), showing the company's operational efficiency
Gross margin is calculated using the following formula:
[Gross margin] = ([Revenue] - [COGS]) ÷ [Revenue] x 100
Amount billed*
Total amount of revenue that was invoiced and collected during a given period. Analysis of the revenue collection cycle allows better understanding of intra-annual cash seasonality in order to optimize working capital.
MRR movements*
Decomposing MRR growth helps to understand how MRR evolved over a given period, detailing the main variations:
New: new MRR generated by acquired customers
Reactivation: new MRR generated by customers who previously churned or paused their subscription and were reactivated
Attrition (Churn): MRR lost due to lost customers
Expansion (Upsell): incremental MRR generated by increasing the subscription price, the number of products/plans subscribed to, or the number of users
Contraction (Downsell): MRR lost due to a decrease in subscription amount, the number of products/plans subscribed to, or the number of users
Impact of foreign currencies (FX): MRR variation due to exchange rate fluctuations
N
Number of active subscribers*
The number of active subscribers is the sum of all customers who have an active subscription at a given time.
This indicator allows you to accurately track the number of customers who are currently generating recurring revenue and the growth of your customer base.
New (New business)*
First subscription activated for a customer who did not have active MRR the previous month.
NRR (Net Recurring Revenue)*
Net retention rate indicating the growth or contraction of revenue from existing customers, taking into account churns and upsells.
[NRR] = ([MRR at period start] - [Downsell] - [Churn] + [Upsell]) ÷ [MRR at period start]
P
Pricing plan*
Offer or product sold by subscription. Each plan has a price, a frequency (monthly, annual...) and a billing logic.
Pipeline Coverage
Measure of the value of sales pipeline opportunities relative to revenue targets, with a coverage ratio of 3:1 considered ideal to reach targets.
[Pipeline Coverage] = [Total Pipeline Value] ÷ [Revenue Target]
R
Reactivation*
Resumption of a subscription by a previously churned customer (without active MRR). Generates a positive movement in retention analysis
Churn recognition*
Parameter allowing to define when a cancellation is taken into account in MRR:
At request date: MRR is removed as soon as the customer notifies their intention to cancel, even if the service continues to be provided until the contractual expiry
At effective date: The MRR drop is recorded on the day the subscription actually goes to €0 in the billing system (often the monthly/annual due date)
At the end of the service period: Churn is recognized when the customer is no longer served; for an annual subscription paid in advance, MRR remains accounted for until the last day covered by the invoice.
Recognized revenue*
Revenue is the amount of receipts generated by your company over a given period, usually a month or a year.
Revenue is distinguished into two parts:
Recurring revenue: this is the revenue recognized for all your active subscriptions over a given period. Revenues from subscriptions covering a period longer than one month are smoothed over the duration of the subscription and recognized based on the number of days in the selected period. This notion therefore differs from MRR, which is the sum of the monthly amounts of all active subscriptions at a given time.
Non-recurring revenue: this is the sum of all invoiced items that are not related to subscriptions (one-off, setup fees, etc.) over a given period.
Cash runway
Cash runway corresponds to the number of months before your company runs out of cash, based on your average cash consumption over previous months.
Average cash consumption is a measure of the amount of cash consumed by your company over a given period. It is calculated on a gross and net basis as follows:
[Gross cash consumption over a given period] = [sum of all cash outflows over a given period][Net cash consumption over a given period] = [sum of all cash outflows and inflows, excluding financing inflows (for example, a fundraising) over a given period]
We calculate cash consumption on a monthly basis and average it over a chosen period (1, 2, 3, 6 or 12 months) to smooth out possible monthly volatility effects.
Once cash consumption is defined, cash runway is calculated with the following formula:
[Cash runway (in months)] = [Current cash balance] / [Net or gross cash consumption]
If you generate a cash surplus over the selected period, your cash runway will not be displayed because it is technically infinite.
S
Segment*
Group of customers filtered according to criteria (plan, country, channel, etc.). Used to perform targeted analyses or track a specific subset.
SaaS Quick Ratio*
Ratio between MRR gained and MRR lost over a period. A ratio greater than 1 confirms the company is growing
[SaaS Quick Ratio] = ([New MRR] + [MRR Expansion]) ÷ ([Churn MRR] + [MRR Contraction])
SaaS Magic Number
Assessment of the impact of sales and marketing investments on revenue growth
[SaaS Magic Number] = ([Current quarter revenue] - [Previous quarter revenue] x 4) ÷ [Previous quarter sales and marketing expanses]
Sales Velocity
Measures the daily revenue potential of the current pipeline, taking into account the number of opportunities, the average value of each deal, the conversion rate and the sales cycle length.
[Sales Velocity] = ([Number of opps] x [Average deal value] x [Win rate]) ÷ [Sales cycle]
T
Churn rate*
Percentage of MRR or customers lost over a given period.
Several variants are available in Fincome (customer churn, value churn, net churn).
Tauxdechurn=MRRdeˊbutdepeˊriodeMRRperdu
Revenue growth rate*
Tracking the percentage increase in revenue over a given period, serving as a direct indicator of company growth.
[Revenue growth rate] = ([Revenue this period] - [Revenue last period]) ÷ [Revenue last period] x 100
W
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