SaaS metrics are the standardized measurements that subscription software businesses use to evaluate health, predict growth, and communicate performance to stakeholders. Unlike traditional businesses measured by quarterly revenue and profit, SaaS companies are evaluated on recurring revenue momentum, customer retention efficiency, and the ratio between acquisition costs and lifetime value.
Key Concepts
The essential SaaS metrics dashboard includes: MRR/ARR (recurring revenue), MRR Growth Rate (momentum), Net Revenue Retention (expansion minus churn), Gross Margin (revenue minus cost of goods sold), CAC (acquisition cost), CAC Payback Period (months to recover acquisition cost), LTV:CAC Ratio (return on acquisition investment), Logo Churn (customer loss rate), and Burn Multiple (capital efficiency).
Metrics matter differently by stage. Pre-seed: focus on engagement and retention of early users. Seed: demonstrate MRR growth rate and initial retention. Series A: prove unit economics with LTV:CAC above 3x and NRR above 100%. Series B: show efficient scaling with declining burn multiple and expanding margins. Growth stage: demonstrate path to Rule of 40 (growth rate + profit margin exceeds 40%).
Why It Matters
SaaS metrics provide a common language between founders, investors, and operators. A founder saying "we are doing well" is subjective. Reporting "$2M ARR growing 15% month-over-month with 125% NRR and 3.5x LTV:CAC" is precise and benchmarkable against thousands of comparable companies.
These metrics also surface problems early. Declining NRR predicts future revenue contraction months before it appears in top-line numbers. Rising CAC payback signals channel saturation before growth stalls visibly.
In Practice
A Series A SaaS company's monthly board deck shows: $1.8M ARR (up from $1.2M last quarter), 12% MoM growth, 118% NRR, 3.2x LTV:CAC, 9-month payback, 2.8% monthly logo churn, 72% gross margin, and 1.8x burn multiple. The board identifies churn as the primary lever: reducing it from 2.8% to 2% would push NRR above 130% and LTV:CAC above 4x without additional acquisition spending.
Pro Tips
Automate metric tracking from day one using tools like ChartMogul, Baremetrics, or ProfitWell. Analyze metrics as a system, not in isolation. High growth with terrible retention is not success; it is a masked problem. Compare against stage-appropriate benchmarks (OpenView, Bessemer Cloud Index) rather than aspirational unicorn metrics. Report metrics consistently; changing calculation methods between periods destroys comparability and investor trust.