finance-metrics-quickref

What this skill does

## Purpose

Quick reference for any SaaS finance metric without deep teaching. Use this when you need a fast formula lookup, benchmark check, or decision framework reminder. For detailed explanations, calculations, and examples, see the related deep-dive skills.

This is not a teaching tool—it's a cheat sheet optimized for speed. Scan, find, apply.

## Key Concepts

### Metric Categories

Metrics are organized into four families:

1. **Revenue & Growth** — Top-line money (revenue, ARPU, ARPA, MRR/ARR, churn, NRR, expansion)
2. **Unit Economics** — Customer-level profitability (CAC, LTV, payback, margins)
3. **Capital Efficiency** — Cash management (burn rate, runway, OpEx, net income)
4. **Efficiency Ratios** — Growth vs. profitability balance (Rule of 40, magic number)

### When to Use This Skill

**Use this when:**
- You need a quick formula or benchmark
- You're preparing for a board meeting or investor call
- You're evaluating a decision and need to check which metrics matter
- You want to identify red flags quickly

**Don't use this when:**
- You need detailed calculation guidance (use `saas-revenue-growth-metrics` or `saas-economics-efficiency-metrics`)
- You're learning these metrics for the first time (start with deep-dive skills)
- You need examples and common pitfalls (covered in related skills)

---

## Application

### All Metrics Reference Table

| **Metric** | **Formula** | **What It Measures** | **Good Benchmark** | **Red Flag** |
|------------|-------------|----------------------|-------------------|--------------|
| **Revenue** | Total sales before expenses | Top-line money earned | Growth rate >20% YoY (varies by stage) | Revenue growing slower than costs |
| **ARPU** | Total Revenue / Total Users | Revenue per individual user | Varies by model; track trend | ARPU declining cohort-over-cohort |
| **ARPA** | MRR / Active Accounts | Revenue per customer account | SMB: $100-$1K; Mid: $1K-$10K; Ent: $10K+ | High ARPA + low ARPU (undermonetized seats) |
| **ACV** | Annual Recurring Revenue per Contract | Annualized contract value | SMB: $5K-$25K; Mid: $25K-$100K; Ent: $100K+ | ACV declining (moving downmarket unintentionally) |
| **MRR/ARR** | MRR × 12 = ARR | Predictable recurring revenue | Growth + quality matter; track components | New MRR declining while churn stable/growing |
| **Churn Rate** | Customers Lost / Starting Customers | % of customers who cancel | Monthly <2% great, <5% ok; Annual <10% great | Churn increasing cohort-over-cohort |
| **NRR** | (Start ARR + Expansion - Churn - Contraction) / Start ARR × 100 | Revenue retention + expansion | >120% excellent; 100-120% good; 90-100% ok | NRR <100% (base is contracting) |
| **Expansion Revenue** | Upsells + Cross-sells + Usage Growth | Additional revenue from existing customers | 20-30% of total revenue | Expansion <10% of MRR |
| **Quick Ratio** | (New MRR + Expansion MRR) / (Churned MRR + Contraction) | Revenue gains vs. losses | >4 excellent; 2-4 healthy; <2 leaky bucket | Quick Ratio <2 (leaky bucket) |
| **Gross Margin** | (Revenue - COGS) / Revenue × 100 | % of revenue after direct costs | SaaS: 70-85% good; <60% concerning | Gross margin <60% or declining |
| **CAC** | Total S&M Spend / New Customers | Cost to acquire one customer | Varies: Ent $10K+ ok; SMB <$500 | CAC increasing while LTV flat |
| **LTV** | ARPU × Gross Margin % / Churn Rate | Total revenue from one customer | Must be 3x+ CAC; varies by segment | LTV declining cohort-over-cohort |
| **LTV:CAC** | LTV / CAC | Unit economics efficiency | 3:1 healthy; <1:1 unsustainable; >5:1 underinvesting | LTV:CAC <1.5:1 |
| **Payback Period** | CAC / (Monthly ARPU × Gross Margin %) | Months to recover CAC | <12 months great; 12-18 ok; >24 concerning | Payback >24 months (cash trap) |
| **Contribution Margin** | (Revenue - All Variable Costs) / Revenue × 100 | True contribution after variable costs | 60-80% good for SaaS; <40% concerning | Contribution margin <40% |
| **Burn Rate** | Monthly Cash Spent - Revenue | Cash consumed per month | Net burn <$200K manageable early; <$500K growth | Net burn accelerating |
| **Runway** | Cash Balance / Monthly Net Burn | Months until money runs out | 12+ months good; 6-12 ok; <6 crisis | Runway <6 months |
| **OpEx** | S&M + R&D + G&A | Costs to run the business | Should grow slower than revenue | OpEx growing faster than revenue |
| **Net Income** | Revenue - All Expenses | Actual profit/loss | Early negative ok; mature 10-20%+ margin | Losses accelerating without growth |
| **Rule of 40** | Revenue Growth % + Profit Margin % | Balance of growth vs. efficiency | >40 healthy; 25-40 ok; <25 concerning | Rule of 40 <25 |
| **Magic Number** | (Q Revenue - Prev Q Revenue) × 4 / Prev Q S&M | S&M efficiency | >0.75 efficient; 0.5-0.75 ok; <0.5 fix GTM | Magic Number <0.5 |
| **Operating Leverage** | Revenue Growth vs. OpEx Growth | Scaling efficiency | Revenue growth > OpEx growth | OpEx growing faster than revenue |
| **Gross vs. Net Revenue** | Net = Gross - Discounts - Refunds - Credits | What you actually keep | Refunds <10%; discounts <20% | Refunds >10% (product problem) |
| **Revenue Concentration** | Top N Customers / Total Revenue | Dependency on largest customers | Top customer <10%; Top 10 <40% | Top customer >25% (existential risk) |
| **Revenue Mix** | Product/Segment Revenue / Total Revenue | Portfolio composition | No single product >60% ideal | Single product >80% (no diversification) |
| **Cohort Analysis** | Group customers by join date; track behavior | Whether business improving or degrading | Recent cohorts same/better than old | Newer cohorts perform worse |
| **CAC Payback by Channel** | CAC / Monthly Contribution (by channel) | Payback by acquisition channel | Compare across channels | One channel far worse than others |
| **Gross Margin Payback** | CAC / (Monthly ARPU × Gross Margin %) | Payback using actual profit | Typically 1.5-2x simple payback | Payback using margin >36 months |
| **Unit Economics** | Revenue per unit - Cost per unit | Profitability of each "unit" | Positive contribution required | Negative contribution margin |
| **Segment Payback** | CAC / Monthly Contribution (by segment) | Payback by customer segment | Compare to allocate resources | One segment unprofitable |
| **Incrementality** | Revenue caused by action - Baseline | True impact of marketing/promo | Measure with holdout tests | Celebrating revenue that would've happened anyway |
| **Working Capital** | Cash timing between revenue and collection | Cash vs. revenue timing | Annual upfront > monthly billing | Long payment terms killing runway |

---

### Quick Decision Frameworks

Use these frameworks to combine metrics for common PM decisions.

#### Framework 1: Should We Build This Feature?

**Ask:**
1. **Revenue impact?** Direct (pricing, add-on) or indirect (retention, conversion)?
2. **Margin impact?** What's the COGS? Does it dilute margins?
3. **ROI?** Revenue impact / Development cost

**Build if:**
- ROI >3x in year one (direct monetization), OR
- LTV impact >10x development cost (retention), OR
- Strategic value overrides short-term ROI

**Don't build if:**
- Negative contribution margin even with optimistic adoption
- Payback period exceeds average customer lifetime

**Metrics to check:** Revenue, Gross Margin, LTV, Contribution Margin

---

#### Framework 2: Should We Scale This Acquisition Channel?

**Ask:**
1. **Unit economics?** CAC, LTV, LTV:CAC ratio
2. **Cash efficiency?** Payback period
3. **Customer quality?** Cohort retention, NRR by channel
4. **Scalability?** Magic Number, addressable volume

**Scale if:**
- LTV:CAC >3:1 AND
- Payback <18 months AND
- Customer quality meets/beats other channels AND
- Magic Number >0.75

**Don't scale if:**
- LTV:CAC <1.5:1 AND
- No clear path to improvement

**Metrics to check:** CAC, LTV, LTV:CAC, Payback Period, NRR, Magic Number

---

#### Framework 3: Should We Change Pricing?

**Ask:**
1. **ARPU/ARPA impact?** Will reve