The hosts discuss SaaS metrics from the Klaviyo S-1, including ARR, CAC Payback Period, GRR, and NRR. They explore the nuances of SaaS metrics and the lack of a standard definition. Topics also include Klaviyo's pricing model, customer churn, ARR calculation, and the abundance of information in Klaviyo S1 documents.
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Quick takeaways
Clavio defines ARR as 12 times MRR, providing a clear formula for calculating Annual Recurring Revenue.
Clavio's CAC Payback Period is 14 months, which is relatively high compared to their average customer revenue.
Clavio's calculation of NRR and GRR includes weighted averages and excludes contractions, making it complicated to interpret these metrics.
Deep dives
What Clavio defines as ARR in their S1
Clavio defines ARR (Annual Recurring Revenue) as 12 times MRR (Monthly Recurring Revenue).
How Clavio defines MRR in their S1
Clavio defines MRR as the amount of revenue they expect to receive in the next monthly period from their existing paid subscriptions. This definition does not include forecasting new customers or churn for the next month.
Clavio's CAC Payback Period
Clavio calculates their CAC Payback Period by determining the change in revenue from 12 months prior to the date of determination to the revenue on the date of determination. They then multiply this change in revenue by their gross margin. Their CAC Payback Period is 14 months, which is relatively high given their average customer revenue.
Clavio's Net Revenue Retention (NRR) Calculation
Clavio calculates their NRR by comparing the ARR from a cohort of customers 12 months prior to the date of determination to the ARR of the same cohort on the date of determination. They use a weighted average point-in-time ARR based on the last day of each month in the current trailing 12-month period, with weightings determined by the total ARR at the end of each period.
Issues with Clavio's Growth Revenue Retention (GRR) Metric
Clavio calculates their GRR by only including the impact of customer losses (churn) and excluding expansions or contractions. This exclusion of contractions is unusual for a GRR metric and can lead to skewed results. The weighted average calculation used in both NRR and GRR further complicates the understanding of these metrics.
On this episode, Dave "CAC" Kellogg and Ray "Growth" Rike discuss four SaaS metrics from the Klaviyo S-1 including:
Annual Recurring Revenue (ARR)
CAC Payback Period
Gross Revenue Retention (GRR)
Net Revenue Retention (NRR)
This conversation covers many of the nuances of SaaS metrics and uncovers the lack of a standard way that even the best companies define and calculate SaaS metrics