Four key indicators of SaaS company: contract income, monthly recurring income, confirmed income and cash income. Through these four data, we can deeply understand the development of a SaaS startup, so it is particularly important to accurately grasp the differences between them.
Among them, confirmed income, contract income and cash income will be reflected in the company's financial statements. Confirm that the income is reflected in the income item of the income statement of the startup company. Cash income appears in the cash flow statement (although it is not easy to find). The total contract income of the company appears in the deferred revenue item of the balance sheet, but it is not necessarily equal to the annual contract income (this involves the difference between ACV and TCV).
Suppose the annual price of software using eucalyptus cloud is $654.38+$200,000, and customers are required to pay quarterly. 65438+1October 65438+May, a customer signed a one-year contract with Eucalyptus Cloud, paying $65438 +0.2 million. In the next 12 months, the company did not sell any other software. The above table shows the difference between the company's contract income, monthly recurring income, income and cash.
The contract revenue of this company 1 month is $654.38+$200,000. Contract revenue refers to the fees that customers promise to pay, that is, the total fees that customers promise to pay in the next year after signing the contract in one month. Companies that have signed contracts with customers for 12 months can be counted as ACV (annual contract amount), and companies that have signed contracts with customers for other terms can be counted as TCV (total contract amount), whether the term is longer than 12 months or shorter than 12 months. Sometimes, startups will calculate annual data based on TCV and report it to ACV.
The company recorded the MRR of 1 as 1000 USD. MRR is equal to the annual consumption amount of all customers divided by 12. Eucalyptus Cloud reports to MRR at the end of each month. Therefore, after one year, assuming that the customer does not renew the contract, the MRR will drop to 0.
In the month of 65438+ 10, the company confirmed the income of $5 16, and then confirmed the income of $ 1000 every month until the first ten days of the following year of 65438+ 10. In the second year of 65438+ 10, the company confirmed revenue of 484 USD. Revenue can only be determined according to the number of days Eucalyptus Cloud provides software to customers. In the above 1 month case, the income can only be confirmed on the last 16 day of this month, that is,16 ÷ 31x1000 = 516 USD. The amortization of this income is called accrual basis.
The company received $3,000 in cash from customers in the first quarter, and then charged the same fee every quarter. The cash income of eucalyptus cloud should be equal to the cash received from customers, and the cash income does not include financing funds.
At first, these four indicators are challenging for start-ups, but they play a vital role in the regular reflection of start-ups, because each indicator reflects the characteristics of the business in a certain aspect.
Author | Thomas Tonguz
Source |/ four important numbers/