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Glossary of financial terms

Updated August 2, 2026

Every metric in Adlega is defined in plain English below. For a deeper dive on any of these, our blog has a full guide per term.

Revenue and growth

  • MRR (Monthly Recurring Revenue), the predictable subscription revenue you earn each month. More →
  • ARR (Annual Recurring Revenue), MRR × 12; the annualized run-rate.
  • Expansion revenue, extra revenue from existing customers upgrading or buying add-ons.
  • Bookings, the total contract value a customer commits to, which may differ from what is recognized as revenue each month.
  • ARPA, average revenue per account.

Retention

  • Churn, the rate at which customers (or the revenue they represent) leave. More →
  • NRR (Net Revenue Retention), revenue retained from existing customers including expansion, net of churn. More →

Unit economics

  • CAC (Customer Acquisition Cost), what it costs, on average, to acquire one customer. More →
  • LTV (Lifetime Value), the total gross profit you expect from a customer over their lifetime.
  • LTV:CAC, the ratio of lifetime value to acquisition cost; 3:1 is a common healthy target.
  • CAC payback, how many months of margin it takes to recover the cost of acquiring a customer. More →

Profit and loss

  • COGS, cost of goods sold; the direct cost of delivering your service (hosting, payment fees, support).
  • Gross profit / gross margin, revenue minus COGS, in dollars and as a percentage.
  • OPEX, operating expenses, split into R&D, S&M and G&A.
  • EBITDA, earnings before interest, tax, depreciation and amortization.
  • Net income, the bottom line after all costs, interest and tax.

Cash

  • Burn rate, how much cash you consume each month. Gross burn is total spend; net burn is spend minus revenue.
  • Runway, how many months of cash you have left at your current net burn. More →

Fundraising

  • Valuation, what your company is worth; Adlega estimates it with the VC method (exit value discounted back to today).
  • Dilution, the percentage of ownership founders give up when they raise.

Don’t see a term? Search the Adlega blog, it has a full glossary of SaaS finance concepts.