SaaS Revenue Forecast Model
I try to keep my financial statement models as simple as possible. I don’t forecast on one tab, but I also don’t have 30+ tabs of assumptions and formulas. I build my models around the operations of the business and the important metrics. Enough detail to be accurate and supportable but not overly done where I forget how to update the inputs with each forecast.
Revenue Forecast model can be downloaded below.
I’m positive all of us have some sort of bookings and/or revenue tab to forecast our revenue assumptions. I recently renovated one of my revenue tabs based on inspiration from Christoph Janz’s blog where he published his SaaS financial model. In this post, I am sharing my take on how I built out one my revenue tabs.
This model requires only a few key assumptions so it doesn’t take long to have a complete revenue and customer forecast for your company or a product line.
- Customer Acquisition Rate
- Average Selling Price in MRR or ARR
- Customer Dollar Expansion
A Picture is Worth a 1000 Words
I love the MRR movement chart in Janz’s model, but I named it MRR Inflow/Outflow. At the end of the day, it’s important to know if you are incrementally net positive or negative with your subscription dollars and customer counts.
Don’t Jam a Bunch of Formulas into one Cell
On a side note, about a month ago I attended a KPMG course on corporate performance value drivers and financial statement modeling. It was an excellent course with a well-respected instructor and classmates who shared an interest in improving their finance and modeling knowledge.
Regarding Excel modeling, the instructor had a great comment about cell formulas and Excel modeling. To paraphrase, he said that if I have to click in a cell to understand the formula, then you have already lost me and your model isn’t efficient. The picture below is a simple example where just by looking at the row layout, you can tell exactly how the revenue number is being calculated.
I know that I am guilty of creating complex formulas that condense a lot of formulas into one cell. Sometimes it can’t be avoided. However, it can be difficult to then go back and understand what that cell is doing, especially if someone is inheriting your Excel model.
As always, please post any comments or questions below! Thanks, Ben.
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ARR version below – if you bill annually.
MRR version below – if you bill monthly.