SaaS Talk™ with the Metrics Brothers - Strategies, Insights, & Metrics for B2B SaaS Executive Leaders

CAC and Growth discuss the recent Scaling SaaS from $1M to $20M ARR ICONIQ Growth report that provides a long term view on the performance metrics benchmarks that SaaS companies exhibit at granular stages of growth including $5M, $10M, $15M and $20M ARR.Benchmarks covered include:Enterprise Five Benchmarks (Median and Top Quartile)Growth Plateau Challenges started at $25M ARRNew Logo GrowthOperating Expense TrendsAnnual Contract Value Growth by StageNew ARR vs Expansion ARRARR per FTEBurn MultipleThe ICONIQ Growth "Scaling SaaS from $1M to $20M ARR" Report provides unique insights and perspectives on the benchmarks that define success as measured by both the top quartile and median benchmarks for the 107 private SaaS companies that are included in this research.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

The Remaining Performance Obligation (RPO) metric has become a more standard metric that public company Wall Street analysts have started to follow closely to help evaluate the bookings growth of recurring revenue companies. CAC and Growth cover the following topics regarding RPO including: Why was the Remaining Performance Obligation createdWhat does the Remaining Performance Obligation (RPO) metric tell investorsHow is RPO calculatedThe difference between RPO and deferred revenueHow multi-year agreements impact both the RPO and Deferred Revenue calculationsIf you are interested in how public company analysts use the RPO metric or are just a student of the SaaS industry - this episode dives deep into an increasingly important SaaS investor metric!See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Discover the critical role customer retention costs play in the SaaS model. The hosts break down essential metrics like the Customer Retention Cost Ratio and Customer Renewal Cost Ratio. They discuss the nuances of measuring customer success and the various factors impacting retention strategies. The conversation delves into the distinction between costs for retention and upselling, highlighting how customer support and marketing efforts can elevate satisfaction. Tune in for insights that could shift your approach to maximizing recurring revenue!

Are headline valuations in B2B SaaS really what they seem? Discover the surprising nuances behind investment announcements as experts discuss the shift from focusing solely on capital raised to highlighting company valuations. Delve into the complexities of stock classes, liquidation preferences, and how these factors can mislead investors. Explore the evolving landscape of valuations, tracing trends back to the unicorn era, and learn why real purchase prices often surpass reported market cap figures. It's a must-listen for SaaS leaders!

Dive into the complexities of Contracted Annual Recurring Revenue (CARR) and Annual Recurring Revenue (ARR) as the hosts dissect their definitions and calculations. Discover how Usage-Based Pricing is reshaping revenue reporting in the SaaS industry. The conversation highlights the challenges of categorizing variable revenue, the transition from fixed licenses to more flexible pricing models, and the importance of implied ARR. Gain insights into revenue recognition practices and the evolving metrics crucial for navigating subscription-based businesses.

In this insightful discussion, Dave Kellogg, a SaaS investment guru, and Ray Rike, a growth strategies expert, unravel the vital concept of Free Cash Flow (FCF). They delve into how FCF serves as a benchmark for measuring company performance and its crucial integration with the Rule of 40. The duo breaks down various calculation methods, exploring the impact of capitalizing sales commissions and R&D. FCF emerges as a pivotal metric not just for B2B SaaS firms, but for investors navigating a maturing industry.

Dive into the latest insights from the 2024 Cloud 100 report, which reveals a jaw-dropping aggregate valuation of $820 billion and a scorching growth rate of 70%, driven largely by AI companies. Discover how the top 10 firms represent nearly 30% of total enterprise value and what this means for public offerings. The hosts discuss valuation trends, the concept of 'Centaur' metrics, and the contrasting fates of large versus small SaaS businesses, all while providing a light-hearted twist on their friendship.

Dave Kellogg, a veteran in customer acquisition cost, and Ray Rike, a B2B SaaS growth strategist, dive into the key insights from the ICONIQ 2024 State of Go-to-Market Benchmark Report. They discuss troubling growth rate trends, especially for smaller companies. The duo analyzes the critical metrics like pipeline coverage ratios and conversion rates, emphasizing the need for a qualified pipeline over simply chasing higher ARR. They provide actionable insights for SaaS executives to optimize revenue growth amid evolving market challenges.

The SaaS Mendoza line highlights the slope of the long term growth rate that investors expect and operators should target on a path to IPO. Dave "CAC" Kellogg and Ray "Growth" Rike break down the updated expectations.Veteran software VC, Rory O’Driscoll of Scale Venture Partners proposed a theory to identify the growth rate below which a company may not be on the VC-to-IPO trajectory.In 2018, Rory started with an analysis of SaaS companies at the time of IPO. In 2018, SaaS companies going public had a minimum run rate ARR of $100M and at least a 25% forward growth rate. He then examined growth rates over time and observed that the growth persistence - which represents the rate of growth decay year over year, that public SaaS companies grew at 80-85% of their previous year’s growth. This metric is commonly known as "Growth Endurance".Dave and Ray discuss the new reality of the SaaS Mendoza line, with the most recent data in 2023-2024 suggesting that a SaaS company must have at least $400M - $500M" in revenue before they can IPO as evidenced by the recent Klaviyo, OneStream and Rubrik initial pubic offerings.CAC and Growth highlight other common "growth expectation" models including the T2D3 (Triple, Triple, Double, Double Double) and 56789 models. If you are evaluating what it takes for early stage company to attract new investors as your growth on a path to IPO - this conversation is full of great insights and perspective on investor expectations.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Go-to-Market trouble shooting is a very common activity in 2024 as B2B SaaS companies continue to face growth and especially efficient revenue growth challenges. In this episode Dave "CAC" Kellogg shares his top-down GTM trouble shooting method which boils down into two primary categories:Pipeline CoveragePipeline ConversionDave and Ray dive into the details on the key metrics to evaluate and what they tell a SaaS GTM operator about the current state of their GTM performance. Key insights are provided across multiple topics including:Week 3, Day 1 Pipeline Coverage RatioWin Rate vs Pipeline Coverage RatioPipeline Conversion MeasurementPipeline Source and CompositionCAC also provides his most basic insight into the top two questions a CEO should be asking which are:Are we giving sales a chance to hit the number (pipeline coverage)Is Sales converting enough opportunities into customers (pipeline conversion)If you are a CEO, CFO or GTM leader in B2B SaaS and are responsible for GTM performance and/or evaluating GTM performance this episode is a great listen! See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.