Software Club – SaaS Series

Finance – Chad VarraSendGrid, Inc.

Key goals

Growth Profitability

• Monthly Recurring Revenue (MRR)• Customers

Measuring Growth

Growth

Increase in MRR/Customers

# of Deals

Deal Growth

Add New Product/Service

for upsell

Decrease in MRR/Customers

Churn

Deal Reduction

JanuaryFebruary

Beginning MRR $1,000 $1,275New MRR 250 300Increased MRR 100 100Lost MRR (50) (60)Decrease MRR (25) (20)Ending MRR $1,275 $1,595

MRR = Monthly Recurring Revenue

January FebruaryBeg Customer Count 5,000

5,130New Customers 150

200Lost Customers _(20)_ _(25)Ending Customer Count 5,130

5,305

Increase Customers 75 75Decrease Customers (10) (10)

Customer Count

Profitability

Customer

CAC

LTV

Financial Statement

Cash Flow

Income Statement

Per Employee

Revenue per Employee

Expenses per Employee

Customer Acquisition Cost (CAC)• What does it cost to acquire a customer?• How many months of MRR does it take to

recover your costs of acquiring that customer?

CAC = (Sales + Marketing +Deploy Costs) # of Deals Closed

Sales Costs = $100,000Marketing Costs = $150,000# of Deals Closed = 600

$100,000 + $150,000 = $416 CAC 600

How long does it take to recover the CAC?Payback Period = CAC/MRR per Customer

Average MRR Per Customer = $100$416/$100 = 4.16 months

Rule of thumb: 12 months or less is good.

Lifetime Value of Customer (Average Lifetime of a Customer * MRR/Cust)- Cost of Revenue- CAC= Lifetime Value of Customer

Lifetime of Customer = 36 mths 24 mthsMRR per Customer = $100 $100Margin = 80% 80%CAC = $416 (4.16 mth payback) $1,600 (16 mth payback)(36*$100)-$720-$416 = $2,464 (24*$100)-$480-$1,600 = $320

Rule of thumb: LTV that is greater than 3x CAC is good

Churn

Churn

Sales

Customer Satisfaction

Product issues

Net Promoter Score

Impacts LTV

So What Are Your Levers• Increase MRR per customer• Increase Customers• Manage CAC• Increase LTV• Decrease Churn