At some point in your SaaS journey, you will be asked about your EBITDA. And then someone will calculate your cash-adjusted EBITDA. Say what? EBITDA represents Earnings Before Interest, Taxes, Depreciation, and Amortization. It’s a widely used measure of financial profitability. EBITDA attempts to eliminate non-cash and non-operating items. Over the long run, it measures […]
How to Calculate CAC Payback Period with Variable Revenue
SaaS pricing and revenue models are evolving and so must traditional SaaS metrics. If we don’t adapt metrics formulas for our revenue streams, our metrics output will be incorrect and misleading. The CAC payback period is one of my favorite metrics. However, it will lead you done the wrong path if you have subscription revenue […]
How to Accelerate Your Financial Maturity
Financial discipline never goes out of style. CFO’s have a good laugh when the market and pundits start calling for financial awareness. When times are good, let’s grow as fast as possible and burn a ton of cash. However, when market sentiment turns negative, let’s control spend and assess our cash runway. Harder economic times […]
Your Investors Want Better Data, Now What
I was chatting recently with an early-stage SaaS founder. She just took on her first round of venture capital. And just like that, the new investors want better data to drive decisions. No more gut decisions and managing your business with your bank account. Now what? My new investors want better data to make decisions. […]
How to Structure Your SaaS P&L
The SaaS P&L is critical to the management of your SaaS business. I talk about the SaaS P&L (profit and loss statement) almost every week with SaaS founders, finance, and accounting teams. At this point, I’ve reviewed hundreds of SaaS P&Ls (also called an income statement). I’d say about 90% of them are structured incorrectly, […]
How to Calculate Your Overall CAC Payback Period
Customer acquisition cost, or CAC, is a ubiquitous SaaS metric. It’s a core sales and marketing efficiency metric. CAC measures the amount of expense to acquire a new customer and the associated revenue from that customer. However, CAC as a standalone measure does not tell us much. We need context. This context comes in the […]
How to Assess Your CAC Profile
When I was a CFO at a private equity (PE) backed company, I was always a little envious of the PE folks. They got so many investment looks at different SaaS companies. And they built their SaaS muscle through the management of their SaaS portfolio companies. That’s changed now that I’m a fractional SaaS CFO. […]
Simple Financial Planning for SaaS Founders
The fourth quarter is traditionally “budget season.” For those in financial planning and analysis (FP&A), you may be cringing at reading the words budget season. I cringe when I think about the many budget memories and late nights at public companies. Is v.21 of the Board deck ready? Ugh. Founders, we are not going down […]
How to Calculate Your Cash Burn Rate
Cash is always king. Forget SaaS metrics…no, just kidding. Whether you are a startup or an established SaaS company, cash is always on your mind. It’s not just “do I have enough” cash. It’s also where in my company do I invest the cash. Understanding your cash burn rate is a critical factor in how […]
How to Benchmark Your OpEx Profile
When I review a SaaS P&L for the first time, I take a high-level approach to understand the financial health of the business. I break the P&L into two sections, the “top half” and the “bottom half.” The top half contains revenue, COGS departments and our gross profit. The bottom half contains our operating expenses […]