Title: Saas Metrics Arr Churn Ltv — LearnCoachAssist

Q: What does ARR stand for in SaaS?
A: Annual Recurring Revenue

Q: What does MRR stand for?
A: Monthly Recurring Revenue

Q: What is ARR?
A: The annualized value of all recurring subscription revenue at a point in time, excluding one-time fees.

Q: What is MRR?
A: The normalized monthly value of all recurring subscription revenue, excluding one-time and non-recurring charges.

Q: What is the basic formula to convert MRR to ARR?
A: ARR = MRR × 12

Q: What is a typical formula to convert ARR to MRR?
A: MRR = ARR / 12

Q: What is gross MRR churn?
A: The percentage of recurring revenue lost in a period from cancellations and downgrades, before any expansion revenue is added.

Q: What is net MRR churn?
A: MRR churn minus expansion MRR; a negative net churn means existing customers grew revenue overall.

Q: What is negative net revenue churn?
A: A situation where expansion revenue from existing customers exceeds churn + downgrade revenue, so net churn is below 0%.

Q: What is logo churn?
A: The percentage of customers (logos) lost over a period, regardless of the revenue they paid.

Q: What is revenue churn?
A: The percentage of recurring revenue lost over a period, often measured gross or net.

Q: What is customer churn?
A: Synonym for logo churn: the rate at which customers cancel.

Q: What is the difference between logo churn and revenue churn?
A: Logo churn measures lost customers; revenue churn measures lost revenue. They can diverge significantly when account sizes vary.

Q: What is gross dollar retention (GDR)?
A: The percentage of starting ARR retained from existing customers, including downgrades but excluding expansion. Floors at 0%.

Q: What is net dollar retention (NDR)?
A: The percentage of starting ARR retained from existing customers, including both downgrades and expansion. Can exceed 100%.

Q: What NDR is considered world-class for SaaS?
A: Above 120%, with leaders often 130%+.

Q: What NDR is considered healthy?
A: Generally 100%+; below 100% means existing customers are net shrinking.

Q: What is the difference between GDR and NDR?
A: GDR excludes expansion revenue; NDR includes it. Both apply to a defined cohort of existing customers.

Q: What is customer lifetime value (LTV or CLV)?
A: The total recurring revenue a customer is expected to generate over the entire duration of their subscription.

Q: What is the simplest LTV formula?
A: LTV = ARPU / churn rate (using the same period for both inputs).

Q: What LTV formula uses gross margin?
A: LTV = (ARPU × gross margin %) / churn rate

Q: What is LTV:CAC?
A: The ratio of customer lifetime value to customer acquisition cost; a key SaaS efficiency metric.

Q: What LTV:CAC ratio is considered healthy?
A: 3:1 or higher is the common rule of thumb.

Q: What LTV:CAC ratio suggests under-investment in growth?
A: Below 3:1, meaning the business may be leaving growth on the table.

Q: What LTV:CAC ratio suggests unsustainable acquisition?
A: Below 1:1, meaning each customer costs more to acquire than they will return.

Q: What is the "payback period" for a SaaS customer?
A: The number of months of gross-margin contribution needed to recover the CAC.

Q: What is a healthy CAC payback period?
A: Under 12 months for SMB SaaS, under 18-24 months for enterprise SaaS.

Q: What is CAC?
A: Customer Acquisition Cost: total sales and marketing spend in a period divided by new customers added in that period.

Q: What is ARPU?
A: Average Revenue Per User (or Per Account) in a defined period, typically a month.

Q: How is ARPU calculated?
A: Recurring revenue in the period divided by the number of customers in that period.

Q: What is the difference between ARPA and ARPU?
A: ARPA is Average Revenue Per Account; ARPU is Average Revenue Per User. In B2B SaaS, ARPA is usually the relevant figure.

Q: What is ACV?
A: Annual Contract Value: the annualized revenue of a single customer contract, including recurring + one-time components normalized to a year.

Q: What is TCV?
A: Total Contract Value: the full contract value over its entire term, including all fees.

Q: What is the difference between ACV and TCV?
A: ACV normalizes revenue to a year; TCV sums all revenue across the full contract term.

Q: What is bookings?
A: The total value of contracts signed in a period, recognized when the contract is signed regardless of revenue recognition schedule.

Q: What is billings?
A: The amount invoiced to customers in a period, which may differ from recognized revenue.

Q: What is recognized revenue?
A: Revenue booked to the income statement in a period, per the revenue recognition policy (e.g., ratably over the contract term).

Q: What is deferred revenue?
A: Cash collected (or billed) for which the service has not yet been delivered; a balance sheet liability.

Q: What is a typical SaaS revenue recognition policy?
A: Recognize subscription revenue ratably over the contract term, starting on the go-live date.

Q: What is annual contract value vs ARR?
A: ACV is for a single contract; ARR sums the recurring portion across the customer base.

Q: What is expansion revenue?
A: Additional recurring revenue from existing customers via upsells, cross-sells, or seat expansion.

Q: What is contraction revenue?
A: Reduction in recurring revenue from existing customers via downgrades or seat reductions.

Q: What is reactivation revenue?
A: Revenue from previously churned customers who return and re-subscribe.

Q: What are the four components of net new MRR?
A: New MRR (new logos), Expansion MRR, Contraction MRR, and Churn MRR. Net new MRR = New + Expansion − Contraction − Churn.

Q: What is quick ratio in SaaS?
A: (New MRR + Expansion MRR) / (Churn MRR + Contraction MRR). Measures growth efficiency of the existing base.

Q: What quick ratio is considered strong?
A: Above 4 is typically considered great, above 2 is solid.

Q: What is Rule of 40?
A: Growth rate (%) + profit margin (%) should equal or exceed 40%.

Q: What does the Rule of 40 measure?
A: The balance between growth and profitability: a SaaS can be unprofitable but fast, or profitable but slow, and still score 40+.

Q: What is the Magic Number in SaaS?
A: The ratio of ARR added in a quarter to the sales & marketing spend in the prior quarter. Formula: (Net new ARR quarter × 4) / prior quarter S&M spend.

Q: What Magic Number suggests S&M is efficient?
A: Above 1.0; above 0.75 is reasonable; below 0.5 suggests inefficient spend.

Q: What is the Rule of 40 example for a SaaS growing 50% with 0% margin?
A: It scores 50, passing the Rule of 40 despite zero profit margin.

Q: What is the difference between gross retention and net retention in one phrase?
A: Gross retention measures revenue kept from the existing base; net retention adds back expansion.

Q: What is CMRR?
A: Committed Monthly Recurring Revenue: MRR that is under contract and expected, often excluding trials.

Q: What is contracted ARR?
A: ARR that is signed and active, excluding pipeline.

Q: What is a "book of business" in SaaS?
A: The full set of active customer contracts and their recurring revenue.

Q: What is usage-based pricing?
A: Pricing tied to a customer's consumption of the product, e.g., per API call or GB stored.

Q: What is per-seat pricing?
A: Pricing based on the number of licensed users or seats.

Q: What is tiered pricing?
A: Packaging the product into named tiers (e.g., Basic, Pro, Enterprise) with feature/usage limits.

Q: What is a usage-based component?
A: A portion of price that scales with consumption, layered on a base subscription.

Q: What is a typical B2B SaaS gross margin?
A: 70-85%; the recurring, hosted nature drives high contribution per incremental customer.

Q: Why is gross margin important in LTV calculations?
A: Low-margin businesses recover CAC slowly, so the same nominal revenue delivers lower LTV.

Q: What is NRR?
A: Net Revenue Retention: same as NDR but typically annualized. NRR/NDR measure the same concept.

Q: How is annual NRR calculated?
A: (Starting ARR + Expansion − Contraction − Churn) / Starting ARR.

Q: What is the difference between gross margin and contribution margin?
A: Gross margin subtracts COGS only; contribution margin also subtracts variable S&M and service costs.

Q: What is the "leaky bucket" metaphor in SaaS?
A: Churn is water leaking from a bucket of customers; expansion is water being added. Net new MRR is the change in bucket level.

Q: Why does expansion matter more than new logos at scale?
A: At scale, the existing customer base is the largest addressable source of net new ARR, so NDR compounds growth.

Q: What is the most common cause of high logo churn in SMB SaaS?
A: Failure to reach activation/a-ha moments and lack of ongoing engagement with the product.

Q: What is product-led growth (PLG)?
A: A go-to-market where the product itself drives acquisition, conversion, and expansion, often via self-serve.

Q: What is a typical PLG conversion benchmark?
A: Free-to-paid conversion rates of 3-8% are common in healthy PLG businesses.

Q: What is an expansion vector?
A: A specific path to grow revenue from an existing customer, e.g., more seats, higher tier, more usage.

Q: What is seat-based expansion?
A: Adding more licensed users to an existing account, increasing ARPA.

Q: What is net new ARR?
A: ARR added in a period net of churn and contraction, including new logos and expansion.

Q: What is implied ARR per employee?
A: Total ARR divided by headcount; a rough productivity benchmark.

Q: What is ARR per customer?
A: Total ARR divided by active customer count; the average account size in annualized terms.

Q: What is a typical enterprise SaaS ACV?
A: Often $50k+ per year, sometimes $100k+, depending on the segment.

Q: What is a typical SMB SaaS ACV?
A: Often $1k-$10k per year, depending on product and segment.

Q: What is the difference between mid-market and enterprise in SaaS?
A: Mid-market typically refers to customers with 100-1000 employees or $10k-$100k ACV; enterprise is larger and more complex.

Q: What is a multi-product land-and-expand strategy?
A: Selling one product initially, then expanding the account with additional products/modules.

Q: What is a land-and-expand motion?
A: Starting with a small initial footprint and growing the account over time via expansion revenue.

Q: What is net new logo growth?
A: The count of new customers added in a period net of churned customers.

Q: What is pipeline coverage?
A: The ratio of open pipeline value to remaining quota for the period; commonly 3x-4x for a healthy quarter.

Q: What is a sales cycle?
A: The time from first serious prospect engagement to closed-won deal.

Q: What is a typical SMB SaaS sales cycle?
A: Often 1-4 weeks for self-serve or transactional, up to a few months for sales-assisted.

Q: What is a typical enterprise SaaS sales cycle?
A: Often 6-12 months, sometimes longer for very large or strategic deals.

Q: What is average contract length (ACL)?
A: The average duration of customer contracts, often measured in months or years.

Q: What is a typical enterprise SaaS contract length?
A: 1-3 years is common, with multi-year discounts incentivized.

Q: What is gross churn rate formula?
A: (Customers lost in period / Customers at start of period) × 100%.

Q: What is a "good" monthly logo churn rate for SaaS?
A: B2B SaaS often targets under 1% monthly logo churn (≈12% annual).

Q: What is a "good" annual gross revenue churn rate?
A: Under 5-7% annually is typical for B2B SaaS; best-in-class is below 5%.

Q: What is the difference between voluntary and involuntary churn?
A: Voluntary: customer actively cancels. Involuntary: churn from failed payments, usually recoverable with dunning.

Q: What is dunning?
A: The process of retrying failed payments and communicating with customers to recover revenue and reduce involuntary churn.

Q: What percentage of churn is typically involuntary?
A: Often 20-40% of churn events in B2B SaaS come from failed payments rather than active cancellations.

Q: What is a reactivation rate?
A: The percentage of churned customers who return and re-subscribe within a defined window.

Q: What is the most accurate way to compute LTV?
A: Cohort-based: sum the actual cumulative gross-margin revenue from a cohort divided by the number of customers in it.

Q: What is the relationship between churn rate and LTV?
A: Lower churn increases LTV; doubling churn rate approximately halves LTV in the simple model.

Q: What is the relationship between gross margin and LTV?
A: Higher gross margin increases LTV linearly; lower margin reduces it proportionally.

Q: What is the relationship between ARPU and LTV?
A: Higher ARPU increases LTV linearly, holding churn constant.

Q: What is the retention curve?
A: A chart of the percentage of a cohort still active over time since acquisition.

Q: What is a "smile" retention curve?
A: A curve that initially flattens or improves, then declines — common in products with seasonal or compounding usage.

Q: What is a "smile-shaped" NDR pattern?
A: NDR dips early as customers churn or downgrade, then rises as surviving customers expand — producing a U- or smile-shape over time.

Q: What is a 12-month NDR benchmark?
A: Top-quartile public SaaS companies report NDR above 120% over a trailing 12 months.

Q: What is the difference between gross and net new ARR in a period?
A: Gross new ARR is from new logos only; net new ARR is gross plus expansion minus churn and contraction.

Q: What is revenue concentration risk?
A: Heavy dependence on a small number of large customers, common in early-stage enterprise SaaS.

Q: What is the "whale" customer?
A: A very large account that contributes a disproportionate share of ARR; a risk if churned.

Q: What is a typical early-stage SaaS revenue concentration?
A: Top 10% of customers can account for 50%+ of ARR; this declines as the base grows.

Q: What is a cohort analysis?
A: Grouping customers by a shared start period and tracking their behavior over time.

Q: What is a cohort retention chart?
A: A grid showing retention rate by cohort (rows) and months since signup (columns).

Q: What is the difference between customer success and customer support?
A: Customer success is proactive, driving adoption and retention; support is reactive, resolving issues as they arise.

Q: What is NPS?
A: Net Promoter Score: % Promoters minus % Detractors among customers surveyed.

Q: What is a good NPS for B2B SaaS?
A: Above 30 is solid; above 50 is excellent.

Q: What is gross margin for a SaaS COGS?
A: Direct costs of delivering the service: hosting, third-party APIs, payment processing, customer success/onboarding for some definitions.

Q: What is a typical cloud hosting cost as % of revenue for SaaS?
A: Often 10-25% of revenue depending on usage-based components and scale.

Q: What is a typical S&M ratio for SaaS?
A: Highly variable; high-growth SaaS may spend 50-80% of revenue on S&M, declining as the company matures.

Q: What is the difference between S&M efficiency and LTV:CAC?
A: S&M efficiency is a period measure of spend vs new ARR; LTV:CAC is a lifetime economic ratio.

Q: What is the difference between gross retention and gross margin?
A: Gross retention measures revenue kept from customers; gross margin measures profit per dollar of revenue after COGS.

Q: What is annual gross dollar retention benchmark?
A: Top-quartile B2B SaaS companies report 90%+ annual GDR.

Q: What is logo retention?
A: The percentage of customers from a starting cohort that remain active after a defined period.

Q: What is the difference between churn rate and retention rate?
A: Retention rate + Churn rate = 100% (for a simple period). They are complements.

Q: What is negative churn vs negative growth?
A: Negative churn means existing customers are a net source of new revenue; negative growth means the whole company is shrinking.

Q: What is the difference between gross churn and revenue churn?
A: Gross churn is total revenue lost; revenue churn is a rate. They are related by the denominator.