Adlega Blog:

What Is Accounts Receivable (AR)? Accounts Receivable is money customers owe you for products or services they’ve received but haven’t paid for yet. It includes: Unpaid customer invoices Credit sales Payment commitments Outstanding bills 👆 By the way, an interesting fact: The concept of accounts receivable dates back to ancient Mesopotamia, where merchants used clay…

What is Net Revenue Retention (NRR) in SaaS? Net Revenue Retention measures how much recurring revenue you keep from existing customers over time, including expansions, upgrades, downgrades, and cancellations. 👆 By the way, an interesting fact: High NRR companies (120%+) typically trade at 18-22x revenue multiples, while low NRR companies (less than 100%) trade at…

What Is SaaS Gross Margin? Gross margin is what’s left of your revenue after paying the direct costs of delivering your software service. Think of it as your “profit per dollar of revenue” before other expenses. 💰 It includes: Revenue from subscriptions Minus hosting costs Minus customer support costs Minus other direct delivery costs 👆…

What is Free Cash Flow? Free Cash Flow (FCF) is the actual cash a company has left after paying for everything it needs to maintain and grow its business. It shows: How much cash is actually available Ability to fund growth Financial flexibility True operational efficiency 👆 By the way, an interesting fact: Warren Buffett…

What Is The Rule Of 40? The Rule of 40 is like a health score for SaaS companies! 🎯 It suggests that a healthy software company’s growth rate plus profit margin should add up to 40% or more. Think of it as a balancing act between growth and profitability. You might be: Growing fast with…

What is the SaaS Magic Number? The SaaS Magic Number tells you how efficiently you’re turning your sales and marketing spending into revenue. It answers the question: “For every dollar we spend on sales and marketing, how much new recurring revenue do we generate?” How to Calculate the SaaS Magic Number The Formula for SaaS…

What is SaaS Quick Ratio? SaaS Quick Ratio measures how much a company’s revenue is growing compared to its losses. It answers the question: “For every dollar of lost revenue, how many dollars of new revenue are we generating?” How to Calculate SaaS Quick Ratio? The Formula for SaaS Quick Ratio SaaS Quick Ratio =…

What is Upsell Rate? Upsell rate measures how successfully you convince existing customers to buy more expensive products or upgrades. It shows: Effectiveness of upgrade offers Customer satisfaction with current products Growth potential from existing customers Success of your value ladder 👆 By the way, an interesting fact: Studies show that the probability of selling…

What is Customer Renewal Rate? Renewal rate is the percentage of customers who extend their subscriptions or contracts when they expire. It tells you: How many customers actively choose to stay The strength of your customer relationships The effectiveness of your product/service Customer satisfaction levels 👆 By the way, an interesting fact: Studies show that…

What is CAC Payback Period? CAC Payback Period is how long it takes your SaaS company to earn back what you spent to acquire a customer. Think of it as your marketing investment’s “break-even point” ⚖️ It answers the question: “How many months until we recover our customer acquisition costs?” How to Calculate CAC Payback…