Financial Glossary
SaaS Metrics
SaaS metrics are the key performance indicators used to evaluate a software-as-a-service or subscription business. They focus on recurring revenue and customer economics rather than one-time sales, and commonly include monthly and annual recurring revenue (MRR/ARR), churn and retention rates, customer acquisition cost (CAC), lifetime value (LTV), and efficiency measures like the CAC payback period and net revenue retention. Together they describe how predictably a company grows and how efficiently it acquires and keeps customers.
Problem & Application
Founders raising capital or managing burn need these metrics because investors and boards judge a subscription business on retention and unit economics, not just top-line revenue. Tracking churn, net revenue retention, and CAC payback reveals whether growth is durable or whether the company is buying revenue that leaks back out. Reliable metrics depend on clean revenue recognition and consistent definitions, which is where many early-stage companies get tripped up.
In Short
SaaS metrics translate recurring revenue into a story about durability and efficiency. They are only as trustworthy as the bookkeeping and definitions behind them.