SaaS Quick Ratio
SaaS Quick Ratio  
Podcast: SaaS Talk™ with the Metrics Brothers - Strategies, Insights, & Metrics for B2B SaaS Executive Leaders
Published On: Tue Dec 31 2024
Description: In this episode, Dave "CAC" Kellogg and Ray "Growth" Rike discuss the SaaS Quick Ratio, a SaaS metric first introduced in 2015 with the goal to measure ARR growth efficiency by comparing New ARR growth versus existing customer ARR contraction.The SaaS Quick Ratio borrows a concept used in general finance known as the "Quick Ratio" - which measures a company's ability to pay it's current liabilities.The formula used to calculate the SaaS Quick Ratio is:(New Logo ARR + Expansion ARR)/ (Churned ARR + Down-Sell ARR)Traditional wisdom says a SaaS Quick Ratio above 4 is good, between 1-4 is ok but beware that ARR growth is not as efficient as it should be and less than 1 is highly inefficient growth - an ARR leaky bucket!If you are a SaaS operator and looking for an easy metric to calculate that quickly highlights ARR growth efficiency as measured by the ratio of New ARR versus Lost ARR - The SaaS Quick Ratio may be for you.Listen to the entire episode to hear CAC and Growth discuss the nuances of the SaaS Quick Ratio!See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.