SaaS (Software as a Service) metrics are the language of recurring revenue businesses. The key metrics: MRR (Monthly Recurring Revenue), ARR (Annual Recurring Revenue), Churn (customer loss rate), NRR (Net Revenue Retention), CAC (Customer Acquisition Cost), LTV (Lifetime Value).
MRR
MRR = Number of Customers × Average Monthly Revenue Per Customer
ARR
ARR = MRR × 12
Net Revenue Retention
NRR = (Beginning MRR + Expansion - Contraction - Churn) / Beginning MRR × 100%
NRR > 100% means you grow even without new customers. World-class = 120%+.
Key Takeaways
- MRR and ARR are the heartbeat of a SaaS business.
- NRR > 100% = you grow even without acquiring new customers.
- Churn is the silent killer — 2%/month = 22% annual loss.
- LTV = ARPU / Churn Rate — fundamental unit economics metric.