With the right methodology, cost productivity discipline not only helps fuel steady growth and big initiatives but also are rewarded by shareholders, leading to substantially higher TSR, in both good times and downturns, according to Bain long-term research.

By Bain & Company and Lauren Kelley | April 13, 2023

With the right methodology, cost productivity discipline not only helps fuel steady growth and big initiatives but also are rewarded by shareholders, leading to substantially higher TSR, in both good times and downturns, according to Bain long-term research.

By Bain & Company | January 24, 2023

Software companies spend more on R&D (research & development) & less on Sales & Marketing (S&M) as a per cent of revenue today than six years ago.

By Tomasz Tunguz | January 17, 2023

CFOs should think about automation as an “additional teammate” in their financial departments as they look to push digital transformation initiatives forward in the new year.

By CFO Dive | January 10, 2023

In an increasingly data-driven world, a surplus of conventional wisdom and “generally accepted benchmarks” constantly bombard SaaS company executives.  When performance benchmarks are used correctly, there is a tremendous value creation opportunity which starts and ends with precision cohorts.

By OPEX Engine | January 3, 2023

Usage-based pricing is good for the customer but makes predicting revenue difficult. CROs & CFOs are challenged w/ predicting how much revenue is expected and when it will be realized. This guest post from revVana explains a simple approach to improving your revenue forecasting.

By revVana | December 6, 2022

During October, Tomasz Tunguz held Office Hours hosting Carilu Dietrich, marketer and advisor at Atlassian to discuss how to successfully run a PLG program. Dietrich shared the 5 pillars in this guest post from Tomasz Tunguz.

By Tomasz Tunguz | November 29, 2022

Both the Customer-Centric and Industry-Centric classifications provide valuable frameworks for evaluating SaaS companies. The CFO’s role is to provide operational and financial insight to the management teams and translate business performance into reporting for investors. Therefore, the CFO must understand both frameworks to succeed as a SaaS CFO.

By Eric Mersch | November 22, 2022

Improving visibility into company cash flow and gaining tighter control of data is essential for financial leaders as they brace for the possibility of a recession, according to a study.

By CFO Dive | November 15, 2022

Usually, the customer churn rate is every SaaS company’s worst enemy. But in this article, we’re going to show you how to not only deal with churn effectively but also how you can use your customer churn data as a valuable tool to build your business. Voluntary churn vs. involuntary churn: What’s the difference? Before looking […]

By Sage Intacct | November 8, 2022

New market leaders have emerged that are far exceeding the performance gold standard Rule of 40, hitting numbers in the 50s, 60s, and even 80s. In this article, Bain has identified four archetypes among these superperformers.

By Bain & Company | October 25, 2022

OPEXEngine, a worldwide leader in SaaS benchmarking, celebrates 1 year anniversary as part of Bain & Company with the release of its “BenchmarkEngine 2023” platform  BOSTON, October 5, 2022 – OPEXEngine, the world’s leading SaaS benchmarking platform, today marks its one-year anniversary as part of Bain & Company. As part of that celebration, it is excited […]

By OPEX Engine | October 6, 2022

It’s no secret that the current uncertain economic climate is taking a toll on our work and personal lives. During times of uncertainty, executive leadership teams make more conservative financial decisions in order to prepare for and/or prevent any major difficulties for the companies that they lead. These decisions and preventative actions have repercussions that […]

By Kevin Dallaire | October 4, 2022

Our August SaaS conversation focused on high performance in R&D, with OPEXEngine CEO and Founder Lauren Kelley hosting Bain Expert Partner Rob Levy. Advances in automation and new engineering techniques are enabling faster development cycles, raising expectations for ROI from the R&D function.  Lauren and Rob shared a range of benchmarks that executive management should consider to accurately assess R&D ROI and resource allocations.  

By OPEX Engine | August 23, 2022

According to a new Bain brief, there are 3 time-tested principles to navigating changing market conditions, or a recession and using data and analytics to thrive. Data and analytics alone won’t get you there, but by following basic best practices, research shows you have a high chance of succeeding.

By Bain & Company | August 9, 2022

Even when the market is repricing and falling, key growth metrics remain fundamental targets to maintain or grow company value because they remain highly correlated to higher valuations, even in this market. While valuation multiples in public markets have dropped dramatically over the past 6 months, the Magic Number (of Sales and Marketing Efficiency), Revenue Growth, and Rule of 40 still align well to top quartile multiples. OPEXEngine looked at 32 public Cloud companies under $1B to see how their current Market Cap to current TTM revenues tracked against these growth metrics.

By Lauren Kelley | July 26, 2022

In today’s market, the path to growth for B2B SaaS companies is to continue following the two SaaS lodestars:  customer acquisition and customer retention.  The companies that successfully navigated through various market disruptions, including the recession in 2008, continued growing by diagnosing whether their acquisition and retention investments were efficient. That means focusing on KPIs […]

By Lauren Kelley | July 1, 2022

New solution supports better resource allocation and engineering outcomes across the $300B+ technology R&D sector BOSTON, June 13, 2022 – OPEXEngine, the world’s leading SaaS benchmarking platform, today launches its new R&D benchmarks solution. The benchmarks help technology executives invest in R&D with more confidence by comparing their own costs and performance with similar organizations. New […]

By OPEX Engine | June 14, 2022

This first review looks at trends in SaaS financials, P&L expenses, and invested capital for private SaaS.  During the month of June, we will review changes we are seeing in customer-facing operations, R&D ROI, and human capital management.

By Lauren Kelley | June 2, 2022

Will there be a recession?  Will private SaaS valuations be affected by the drops in the stock market?  Will fundraising be tougher for all tech companies, or just certain types of companies?  In this blog post, Lauren tackles some of the questions that we have been hearing from SaaS CFOs across the spectrum.   

By Lauren Kelley | May 10, 2022

Reporting of the Remaining Performance Obligation (RPO) Saas metric began with the adoption of ASC 606. In this guest post from Eric Mersch, he explains how this SaaS metric is calculated as the sum of Deferred Revenue and Backlog and why it has become an important indicator of SaaS financial performance.

By Eric Mersch | May 3, 2022

Customer acquisition cost (CAC) is arguably one of the most important metrics for fast-growing B2B SaaS companies.  It measures how much it costs to acquire a new customer and is a key factor in determining the profitability of a business. In this blog post, we will discuss how B2B SaaS CFOs can effectively calculate and monitor these costs, while identifying ways to establish if their financial efforts are in line with relative sources. 

By Lauren Kelley and Nikki Turner | April 26, 2022

Recruiting, hiring and retention of productive employees is critical for SaaS companies. An area that I don’t think gets enough attention from any company is the qualification and interview process for new hires. Especially in 2022’s competitive, inflationary environment, improving this process is both cost-effective and necessary for almost every company. Dave Kellogg, an amazingly thoughtful CEO and advisor provides interviewing best practices – focusing both on what the organization needs to do to prepare and then the interview process itself.

By Dave Kellogg | April 12, 2022

In the right situations, a Product Led Growth Model can be a viable strategy for software companies. However, it’s important to be aware of the potential pitfalls so you can avoid them and maintain your focus on what’s best for your product and customers. In this guest post by Chris Mele, he evaluates the PLG model, and how software companies can do due diligence before implementing a Product-Led Growth Strategy.

By Chris Mele | April 5, 2022

R&D is the backbone of any SaaS company, yet to many CFOs, it is still a black box.  Most companies track R&D as a % of revenue, and maybe a few metrics about activity, but few CFOs can answer the question of what’s the ROI on their R&D investment.  Perhaps even more importantly, what are […]

By Lauren Kelley | March 29, 2022

Private equity blew the doors off in 2021: over a trillion dollars was invested last year by global private equity firms and almost a trillion dollars was returned in exits. The technology and specifically the software and SaaS sector represented 25% of the value invested and 31% of the number of deals. According to new Bain & Company research, over 50% of software deals returned 2.5x or more to investors. Bain also predicts that SaaS and software multiples will continue to be high in 2022 – read more here from Bain’s research on how Private Equity keeps winning in Software.

By Bain & Company | March 22, 2022

In the first 10 years of the SaaS industry, US SaaS companies didn’t need to go overseas to build highly valuable companies. But that dynamic has changed in lockstep with the growth of the SaaS market. Gartner forecasted that global spending on SaaS applications is easily going to exceed $1Trillion by the end of the decade—if […]

By Lauren Kelley | March 15, 2022

Over the last three years, start-ups have raised funding every 15 months. As your SaaS company grows in complexity and expectations, you reach a point where manual processes waste time away from analysis, and you struggle to collect and act on your growing range of financial and operating data. At this point, you need to […]

By Sage Intacct | March 8, 2022

Like the benchmarking of any key metric, you will drive operational efficiency and better use of your resources, when you see the variance between your company and your peers at the same stage and with a similar business model.  You can then also compare your current metrics against the benchmarks for companies that have already […]

By Lauren Kelley | February 23, 2022

In this guest post from FLG Partners, author Eric Mersch focuses exclusively on Small/Mid-Market SaaS companies, and how CFOs must continually monitor the competitive market dynamics to serve as a powerful business partner.

By Eric Mersch | February 22, 2022

Nikki Turner joined the OPEXEngine team as Strategic Finance Consultant. In her new role, she will partner with tech finance executives to evaluate their operational and financial performance against their respective cohorts, while assisting them in implementing various usage models that leverage proprietary OPEXEngine benchmark data.

By OPEX Engine | February 8, 2022

When it comes to IPOs, 2021 was an excellent year for SaaS companies. Accelerated digital transformation across industries put SaaS companies firmly on the hypergrowth path. But this kind of hypergrowth doesn’t happen overnight. In this guest post, written by Mike Beach, insights are shared with CFO on how they can prepare their SaaS enterprise for hypergrowth.

By CFO Dive | February 1, 2022

With 331 SPAC deals enthusiastically closed in 2021, and the collective pool now trading on average 42% below purchase price— we are living in a far different landscape of capitalization opportunities than we were this time last year. Against this backdrop, every SaaS company would be well-served to consider three things as they plot their path to public capitalization: speed to market, the cost of its finance team’s capitalization efforts, and investment scrutiny.

By Lauren Kelley | January 25, 2022

Challenges wrought by the pandemic haven’t come with easy or obvious solutions—other than a measure of agility to adapt to new situations. For three CFOs who began their new roles amid the crisis, planning for volatility required an understanding of their core business, a focus on key priorities, and experience in tackling the unknown in previous roles. In this guest post from Workday Adaptive learn how they were adaptive and leaned into past experience to propel them forward.

By Workday Adaptive Planning | January 18, 2022

Many companies in the technology industry are moving toward “pay for what you use” consumption-based pricing models. The trend has been bolstered by several customer benefits — primarily, the model provides a clear linkage between what a customer pays and what they use or value they realize.
This guest article from CFODive, gives guidance to CFOs seeking to transition from one pricing model to a consumption-based pricing model.

By CFO Dive | January 11, 2022

Consumption pricing–a licensing model where software is sold based on use (actual traffic, transactions, etc.) rather than a fixed fee–is making the headlines these days. “Subscription-based pricing is dead: Smart SaaS companies are shifting to usage-based models” headlined a recent TechCrunch article. “How Usage-Based Pricing Fueled Two 2020 IPOs” led one from Insight Partners. It’s the kind […]

By Chris Mele | January 4, 2022

Business leaders will often see their strategies fail, regardless of how much thought they put into it. Not every effort pays off, and not every investment is worthwhile.

KPIs allow recruitment agencies, hiring managers, and recruiters to understand how successful their actions are in helping them achieve their goals. This guest article from Business 2 Community will analyze what KPIs are necessary to track in order to have a successful SaaS recruitment process.

By Business 2 Community | December 28, 2021

Since 2016, public software has witnessed four corrections. We’re in the midst of the fifth. This guest article from Tomasz Tunguz explains how corrections affect company valuations, and it affects private SaaS companies and their valuations.

By Tomasz Tunguz | December 21, 2021

Technology was a driving force behind the boom in venture investments over the past decade.

From 2010 through 2020, tech start-ups made up a majority of venture funding across all deals by independent venture capital (VC) firms and corporate venture capitalists. This guest article from Bain provides insights from their analysis using their Startup Investment Cruncher database.

By Bain & Company | December 14, 2021

A usage-based pricing model, which leads to increases or decreases in revenue based on how much customers engage with a service, has been gaining on the more traditional subscription model as the main way SaaS companies make money. There is an appetite for usage-based pricing and is expected to continue to accelerate.

This guest article from CFO Dive delves into why some are making the switch. However, there’s one category that hasn’t moved over to a usage-based pricing model. Read this article to learn who is not using it.

By CFO Dive | December 7, 2021

According to Tomasz, there hasn’t been an architectural shift in SaaS since the advent of the multi-tenant database, which allowed SaaS companies to put all of their data across customers on a single database. This may be the next shift.

This guest post from Tomasz Tunguz explains the innovation and implications of having two feedback loops: 1) influencing customers and users, and 2) outputs data products and insights that are then fed into the data warehouse layer for downstream consumption.

By Tomasz Tunguz | November 30, 2021

When searching for the quantitative indicators of product-market fit, numerous investors and advisors point to Lenny Rachitsky’s definition matrix, which optimizes retention, growth, and profitability. When your product finds itself at the intersection of these three elements, you’ve got a solid product-market fit.

However, there are other important indicators to pay attention to along the way. In this guest post, Mixpanel categorizes “6 things about measuring product-market fit” as well as other qualitative metrics that signal product-market fit is on the right track.

By Mixpanel | November 23, 2021

Product Market Fit is an important aspect of SaaS product development. For a SaaS enterprise to be successful, nailing the crucial facets of the product-market fit is pivotal. To validate your product, you must understand if the product is a market fit or not. This guest post from SaaS Industry explains what is Product-Market Fit (PMF) and why PMF is important.

By SaaS Industry | November 16, 2021

Two accounts have identical twelve-month contracts except for the payment terms, how should you calculate the payback period? Read this guest post to learn why there is a need for two metrics to exist – a cash-flow-based months-to-repay and an accrual accounting metric.

By Tomasz Tunguz | November 9, 2021

It’s become almost routine for SaaS companies to reach $1 billion in valuation and stay private for years beyond that to build more value before going public — if they even decide to go that route. These high valuations give CFOs a lot to think about. Read on to learn how as strategic partners to the C-suite, CFOs can make recommendations about the best time to raise capital, whether privately or publicly.

By CFO Dive | November 2, 2021

With software and technology becoming mission-critical for businesses throughout the economy, CEOs in every industry are recognizing that their ability to compete comes down to one thing: having the right talent.
As a result, the war for technology talent is getting fiercer and spreading to new fronts as demand for crucial roles skyrockets. In this guest post from Bain & Company how tech companies can be disrupted due to the talent war.

By Bain & Company | October 26, 2021

To successfully steer their businesses forward, CFOs need real-time information and analytics capabilities to inform overall strategy and to identify, interpret and execute in response to new opportunities and trends. Modern, cloud-based financial systems are designed to deliver these capabilities. People enter data into the system once, ensuring all users have the same, up-to-date information. This guest post from Sage Intacct explains how CFOs can be the guiding force in a digital transformation.

By Sage Intacct | October 18, 2021

In this guest post, CFO Dive shares how you can manage your cash flow can have a big multiplier effect on your company valuation. Also, explain why most finance tools are not optimizing for that.

By CFO Dive | October 12, 2021

Over the past decade, software has created tremendous value for investors and businesses, thanks largely to its transformative effect on the economy, its role in developing new cloud-based business models, and its ability to increase efficiency in operations. The SaaS model allows companies to focus on new ways to create value, and since many companies are early on their journey, more gains may lie ahead. Read on to learn why companies are moving to SaaS subscription models.

By Bain & Company | October 5, 2021

Although EBITDA and FCF measure very different things and can move in opposite directions depending on companies’ responses to changing market conditions, accounting teams should be prepared to do their own calculations when trying to raise credit capital. In this article, we focus on these two terms and how they should be used carefully and in context.

By CFO Dive | September 28, 2021

The most important metric from growing companies is their ability to hit revenue growth targets to validate their current and future valuation.  While sales pipelines provide a point-in-time snapshot of deals expected to close, the revenue generated over time from these opportunities is an overlooked part of the equation. This article will explore what information your pipeline divulges and the next required step to translate that piece of your business into your value on revenue growth.

By revVana | September 21, 2021

OPEXEngine joins Bain & Company, the top management consulting firm and a leading advisor to technology companies and the private equity industry globally. This partnership with Bain will help our clients extract more insight from benchmarks and take action.

By OPEX Engine | September 15, 2021

Effective and strategic CFOs incorporate accurate benchmarking into the daily business of the company and especially into the budgeting and planning process. Benchmarks provide context for initial budgeting drafts and provide guide rails for managers to use in forecasting their needs for the upcoming year.

By Lauren Kelley | September 9, 2021

Tech debt refers to the cost of redeveloping existing products and code that would otherwise not be able to scale or evolve over time to meet shifting consumer needs. And while the concept has been around for years, for most of that time, tech debt was primarily the concern of product and engineering teams. In this guest post from Espresso Capital learn to measure tech debt and understand why it matters.

By Espresso Capital | August 31, 2021

Business operates in a climate of constant change. Here’s how you can make your planning and budgeting process more Agile.

By Bain & Company | August 24, 2021

If you’ve underestimated the importance of financial operations for both the short and long-term success of your SaaS business, you’re not alone. With the explosive growth of the SaaS business model impacting businesses worldwide, many are navigating SaaS financial operations and subscription management for the first time.

These 7 best practices work for growing B2B SaaS businesses.

By Business 2 Community | August 17, 2021

Flexibility and Budgeting rarely appear in the same sentence. That’s a shame as better budgeting and planning tools can bring far more flexibility into the planning, forecasting, and budgeting process. A new budgeting/planning tool should usher in a new process, new insights, and new metrics for running the firm.

This guest post from Sage Intacct explains what an ideal new solution should help with and how to identify if your organization may need to update its budgeting and planning tool.

By Sage Intacct | August 9, 2021

As companies commit to transforming their FP&A function, choosing the right focus and pace is essential. They should align with business leaders on the sources of value creation for the future, then work backward to redesign FP&A around them. And they should carefully choose their spots for investment. That will raise the odds of FP&A shifting its role from scorekeeper to a true business partner.

By Bain & Company | August 3, 2021

We invited an expert on Scaling Finance, Anup Juneja, an Expert Senior Manager at Bain & Company, for part of the SaaS Finance MeetUP. Anup works on G&A and FP&A transformation with numerous clients. He shared his perspective on the four things that world-class Finance organizations have to get right. His presentation took the traditional focus on People, Process and Systems to a far more strategic level when thinking about how SaaS and software CFOs need to frame their organizational planning for scale.

By Lauren Kelley | July 27, 2021

CFOs benefit from tracking and sharing customer experience and other operational key performance indicators; it can help in getting alignment on investment priorities across the organization. CFOs oversee operations or are asked to make budget decisions based on what operational metrics are showing, they can benefit from setting up these types of metrics if they don’t have them.

By CFO Dive | July 20, 2021

This is the 3rd in our 5-part series on the benefits of Software as a Service (SaaS). Our initial post offered some definitions of cloud and SaaS. Our last post explored the value of SaaS in terms of cost savings. In this post, we turn our attention to a different kind of value: innovation. By way of review: All […]

By Sage Intacct | July 13, 2021

Venture debt is a specialized form of corporate credit that differs from traditional corporate lending in a number of important ways. While traditional credit is typically backed by assets or cash flow generated by a business, venture debt is used by fast-growing companies that are consuming — rather than producing — cash to support their […]

By Espresso Capital | July 6, 2021

In honor of Canada Day (July 1) and US Independence Day, we’ve compiled a few interesting facts and comparisons between the US and Canada, all in the spirit of information, curiosity, and some fun.

By Lauren Kelley | July 1, 2021

The sales strategy of “Land and Expand” is common among software companies. So common, in fact, that it might be fair to call it accepted wisdom. First land the customer, then expand them. In this guest post by Chris Mele, CEO of Software Pricing Partners, you will learn the advantages of ‘Expand and Land’ and how to integrate a strategic monetization model.

By Chris Mele | June 29, 2021

The CAC Payback Period, also known as Months to Recover Customer Acquisition Cost (CAC), measures the number of months of subscription revenue it takes to recover the costs to acquire one customer. This metric is one of the many ways to look at the capital efficiency and profitability of a SaaS business.

By Lauren Kelley | June 23, 2021

This time last year, we were all on our 5th, or 20th version of a 2020 operating budget/plan, working 100% remotely, and trying to forecast the rest of the year. Most companies hunkered down, shifted to fully remote sales and marketing, transferred unnecessary travel budgets into other buckets, and conservatively managed expenses.
We’ve published the latest benchmarks incorporating 2020 actuals in our platform and the results are in. Read on to learn about the changes, shifts, and trends we’ve analyzed.

By Lauren Kelley | June 9, 2021

In the unique world of enterprise SaaS, where the buyers are sophisticated, the sales cycle is interminable and the product is invisible, sales teams face a number of unique challenges. Read on to discover the roadblocks you face selling enterprise SaaS solutions, and how to overcome them.

By Laire Digital | June 8, 2021

Smart pricing enabled process management software provider Cherwell to get the most from its subscribers while new businesses languished. When the pandemic hit, executives at Cherwell had to focus growth on existing customers, as the mid-sized businesses it targets with its enterprise service management software would be too hunkered down to try something new. “People […]

By CFO Dive | June 2, 2021

Hiring top talent is one of the most important things you can do to help make your business successful. High-performing talent brings experience and business acumen to the table. They’re also willing to go above and beyond to succeed in their position.

By Espresso Capital | May 25, 2021

Valuations of private companies are generally a mix of quantitative and qualitative analysis, including market sizing and intangibles, like management team reputation, experience, and network. ​​In this blog, we are looking at the business metrics that can be measured quantitatively and providing a few insights on how investors analyze them.

By Lauren Kelley | May 18, 2021

Having happy customers is critical for the success of any business, and SaaS companies are no exception. In fact, attracting, retaining, and establishing profitable long-term relationships with customers is even more important for SaaS companies because it’s the key to the recurring revenue model they’re built around.

By Espresso Capital | May 10, 2021

The most sure-fire way for aspiring CFOs to attract the notice of CEOs and boards is to bring a strategic mindset, communicate well and showcase a background in operational finance, recruiters say.

By CFO Dive | May 4, 2021

High growth software companies are valued based on forward revenue multiples. But, how does the market set the multiple? What predicts the forward multiple, or correlates with it?
Tomasz Tunguz explains how to calculate and predict revenue growth, sales efficiency, and the forward multiple of a SaaS or software company.

By Tomasz Tunguz | April 27, 2021

In today’s final installment, we review the 2021 plans regarding “Hybrid & Remote Work Models for 2021,” and “Office Space Planning” from approximately 100 senior Finance executives in SaaS & cloud companies. As well as key findings from Microsoft’s Work Trend Index regarding hybrid-remote work.

By Lauren Kelley | April 21, 2021

In today’s installment, we review the results regarding the “Top Growth Initiatives for 2021,” “Internal Investments,” and “Strategic Finance Goals” that those surveyed are planning to make. In 2021 competition for customers, product category leadership, and acquiring new employees is expected to be fierce within the SaaS market[…]

By Lauren Kelley | April 14, 2021

In the first installment of this three-part series, OPEXEngine shares the results from our recent SaaS Q1 2021 CFO Pulse Survey, conducted in March. In this post, we analyze the responses to the question:
What Are the Most Significant Factors Impacting the Business Environment for Your Company in 2021[…]

By Lauren Kelley | April 8, 2021

In mid-June 2020, a PwC survey of 330 U.S. finance leaders found that one-third of US CFOs now expect it will take more than six months to get there. Two months earlier, just 2% of CFOs anticipated recovery would take that long. Finance leaders are in a critical position to help assess the options and […]

By Workday Adaptive Planning | April 6, 2021

CFOs want FP&A to become stewards of value creation, not just to keep score. If you’re a business leader or CFO committed to future-proofing your company, we highly recommend that you read a new brief from Bain & Company, When Financial Planning and Analysis Needs an Overhaul.   To operate in the post-COVID-19 digital world, […]

By Lauren Kelley | March 31, 2021

Venture debt is a specialized form of corporate credit that differs from traditional corporate lending in a number of important ways. While traditional credit is typically backed by assets or cash flow generated by a business, venture debt is used by fast-growing companies that are consuming — rather than producing — cash to support their […]

By Espresso Capital | March 30, 2021

By, Anna Talerico, for SaaSX My SaaS and startup DNA includes a lot of experience in running professional services organizations. But knowing how professional services revenue is valued in the market (not as much as you would think), and how hard it can be to maintain high margins, I can never recommend a SaaS launch […]

By SaaSX | March 24, 2021

Throughout the world, businesses of every size are feeling firsthand the impacts of instability. In a time of uncertainty, surviving and thriving comes down to how promptly your business can identify disruptive changes and proactively respond to them. That’s not so easy when your business is mired in static planning—characterized by long planning cycles, immediately […]

By Workday Adaptive Planning | March 17, 2021

In August 2020, Zenefits CEO Jay Fulcher posted on LinkedIn, saying, “Success takes work, study, time, grit, courage, experimentation, resilience, and a belief in yourself that may not always be steady but never goes completely away … there are no shortcuts.” Garnering nearly 1 million views, 14,000 likes, and more than 1,100 comments, his message […]

By Underscore VC | March 9, 2021

Where is the SaaS world relative to how far it can go? With valuations of as-a-service companies and all-time highs or close to it, and more and more startups leveraging this model to serve an ever-larger number of consumers, I wondered how much more business is there to capture? Let’s try to estimate. We do […]

By Tomasz Tunguz | March 3, 2021

As non-GAAP measures, they might be based on variables other companies don’t share, but they can be made more accurate, says SaaStr head Jason Lemkin. If your monthly recurring revenue (MRR) numbers don’t add up to your annual recurring revenue (ARR) when you extend them out for a year, you’re misreporting the financial health of […]

By CFO Dive | February 24, 2021

For many of us in tech, we’re going 9+ months strong working from home. We miss seeing colleagues in person, there may be distractions galore in a home office, and there’s no clear end in sight. How can leaders keep employees engaged and effective during these challenging times? To find out, we hosted a discussion […]

By Underscore VC | February 16, 2021

The SaaS market is expected to reach $164.29 billion by 2022 — which means the key innovations of this business model are about to inspire even more businesses. And with more popularity comes more confusion, especially over what metrics are most important to drive the best results. We’ve done a lot of work with B2B […]

By SaaSOptics | February 9, 2021

Last week, FLG Partners, a group of experienced CFOs in the Bay Area, put on a webinar called “Pivoting to SaaS: Best Practices, Lessons Learned, and Case Examples” for traditional software and hardware companies. I participated, along with a terrific panel moderated by CFO Eric Mersch, to talk about the lessons learned over the past […]

By Lauren Kelley | February 2, 2021

Many founders and CEOs have seen their business plans upended by COVID-19. That’s because very few contingency plans accounted for the scale and nature of the disruption we’re all experiencing. In fact, even many of the largest and best managed public companies withdrew their guidance as the full impact of the pandemic became clear. The […]

By Espresso Capital | February 2, 2021

How COVID-19 has affected Customer Acquisition Cost Calculations A good business practice every year is to review your KPI calculations and adjust for any changes. Right now, this is especially true because of all the changes every company undertook due to the pandemic,  especially moving to remote work and contactless selling to customers. This post […]

By Lauren Kelley | January 27, 2021

Net Dollar Retention is one of the most important metrics is a SaaS business. It measures the value of a cohort of customers over time including expansion, cross-sell, and churn (loss of revenue). But how do you measure NDR? Imagine this is your company’s data. The first column is the cohort month for each cohort […]

By Tomasz Tunguz | January 26, 2021

Customer success in SaaS is fast becoming the first line of attack to boost conversions, raise customer happiness, and reduce churn. Every day, a strong customer success strategy is becoming more and more essential for SaaS companies. So what exactly is customer success, how does it work, and are you “doing it right”? Don’t worry, we’ll explain it […]

By SaaSX | January 20, 2021

If 2020 is remembered as the year of COVID-19, 2021 will be remembered as the year of change. Putting aside everything else that may change, let’s just focus on SaaS in 2021. Cloud and SaaS companies overall benefited from the dramatic shift to digital and remote work in the US and around the world since […]

By Lauren Kelley | January 13, 2021

Customer Acquisition Cost (CAC) is a key SaaS metric that accounts for how much it costs your company to procure each new customer. The received wisdom is that reducing your CAC is one of the best ways to increase your company’s profitability and likelihood of success. However, this metric calls for discerning judgment. What it […]

By Lighter Capital | January 5, 2021

Each year, we do our best to provide you with valuable SaaS insights and share best practices through case studies, reports, webinars, and blog posts. We also invite other CFOs and thought leaders from the SaaS and Software industry and VC executives to share their content on our blog and provide different perspectives into financial […]

By Lauren Kelley | December 31, 2020

Some SaaS startups develop a form of zero-sum delusion early in their evolution, characterized by the following set of beliefs. Believing that: A customer has a fixed budget that is 100% fungible between ARR (annual revenue revenue) and services It is in the company’s best interest to turn as much of the customer’s budget as […]

By Dave Kellogg | December 23, 2020

Churn is the enemy of subscription-based businesses; it measures the rate at which your hard-won customers cancel their subscription to your service. Left unchecked, what seems like a relatively low customer churn rate month-on-month can quickly escalate into a crippling annual churn rate that your business can’t sustain. Fortunately, small improvements in your customer churn […]

By Cobloom | December 15, 2020

Each class has different demand signal patterns that can help with model selection. Companies often group their demand series according to a business or organizational structure, such as a planning hierarchy or reporting hierarchy. Although this type of grouping is easy to organize and report, it is poorly suited for modeling purposes. Instead, companies should […]

By OPEX Engine and Bain & Company | December 9, 2020

With help from cloud platforms and AI-assisted technology, going back to the start each budget cycle is easier and leads to more accurate cuts. Zero-based budgeting is gaining in popularity as companies cut costs because of the pandemic, but it’s not the slash-and-burn tactic it used to be. Instead, businesses are having success applying the […]

By CFO Dive | November 30, 2020

While many of these mistakes or potential issue items are likely to be more prevalent in a business with a lean (or essentially non-existent) finance team, we’ve seen large businesses deal with many of these same challenges. Here are the top 8 mistakes I see most frequently (along with some potential fixes if you are […]

By SaaSX | November 23, 2020

If there is one thing I have learned in my decades of building businesses, it is that KPIs are most useful if you are clear about the goal of the metric. You have to know what the KPI should be telling you in order to understand how to calculate it. If you don’t, you may […]

By Lauren Kelley | November 17, 2020

The COVID-19 pandemic and its impact on the broader economy have created unprecedented uncertainty for management teams and investors, while rendering many existing business plans irrelevant. This uncertainty has made it much more difficult for most businesses to accurately forecast growth, operating metrics, and liquidity. To better prepare for the future, and any challenges and […]

By Espresso Capital | November 17, 2020

To outline a hands-on, effective approach to customer health scoring, Underscore VC sourced insights from the Customer Success Core. In this framework, you’ll learn how to design a scoring system that aligns to your growth strategy, brainstorm and select leader indicators of success, and operationalize the system across your startup.   After Jebbit raised its Series B, […]

By Underscore VC | November 11, 2020

If you are in SaaS you already know the days of software vendors pitching monolithic enterprise solutions to corporate executives are quickly giving way to a growth model that centers on the end-user discovering software solutions on their own. This is product-led growth, a grassroots distribution model that scales from the bottom up, instead of […]

By SaaSX | October 30, 2020

While a handful of tech companies like Zoom and Shopify are enjoying massive gains as a result of COVID-19, that’s obviously not the case for most. Weaker demand, slower sales cycles, and customer insistence on pricing concessions and payment deferrals have conspired to cloud the outlook for many tech companies’ growth. Compounding these challenges, a […]

By Espresso Capital | October 23, 2020

In the latest edition of our Member Spotlight Series, we spoke with Dominic Ballinger, director of FP&A and Integration at Sage, to discuss how they’ve been affected by the coronavirus pandemic and how BenchmarkEngine™ aids in Sage’s annual planning process.

By Lauren Kelley | October 19, 2020

Instead of considering the budgeting process a rote exercise or an operational hurdle, CFOs and their companies can use it as a significant opportunity. This is now of greater importance given the impact of the COVID-19 pandemic. Those CFOs who are able to successfully transform legacy budget and planning processes can act quickly when faced with change, […]

By Workday Adaptive Planning | October 13, 2020

Jason Purcell, Co-founder and CEO of Salsify, saw firsthand the crippling economic impacts of the 2008 Great Recession. In building Salsify, a product experience management company, he and his executive team expected another recession to occur at some point, and they knew they’d have to plan for the worst. In turn, they made contingency planning […]

By Underscore VC | October 6, 2020

From accountants to FP&A professionals, the Office of Finance is fast becoming the engine of insight in the modern enterprise. This hasn’t always been so. For years accountants were seen as “bean counters” and CFOs as gatekeepers. But that’s changing as powerful new technologies help finance teams transform corporate data into insights that help organizations […]

By Workday Adaptive Planning | September 29, 2020

Net dollar retention is the most important metric in SaaS. We find that companies with great net dollar retention (100%+) grow quickly and are more cash efficient than those with mediocre or poor net dollar retention. They’re also far more attractive to acquirers and VC. Sprout Social, which provides software for managing social media and […]

By Blossom Street Ventures | September 22, 2020

There’s a lot of attention being paid to the concept of agility right now. Given the world we’re living in, that’s hardly surprising. Against a backdrop of uncertainty, agile businesses have the ability to rapidly adjust their people and processes to create more value and react quickly to changing conditions. Yet, from a finance perspective, […]

By Workday Adaptive Planning | September 15, 2020

As we head into the final stretch of the year, here’s a look at some of the top operational and business trends that we are hearing about. Most SaaS and Software companies are starting to gear up for end of the year budgeting and planning exercises. Part of that exercise requires forecasting both the close of […]

By Lauren Kelley | September 10, 2020

Exercise one time, and you will get benefits. Exercise daily, enough to build your muscle mass, and your metabolism actually increases. Similarly, run a business change program once and you may reap short-term benefit. Do it repeatedly, with purpose, and your organization’s ongoing ability to change will jump. In today’s business environment, change is the […]

By OPEX Engine and Bain & Company | September 8, 2020

“People over 45 basically die in terms of new ideas.” said venture capitalist Vinod Khosla in 2011.  “People under 35 are the people who make change happen,” he further asserted.  Taking the exact opposite tack, in a recent CNBC interview, Alan Patricof, founder of Greycroft Partners, an elite venture capital firm, said: “academic studies show that the success rate […]

By N2Growth | September 1, 2020

Financial modeling is like a superpower—one that lets you test your assumptions and hypotheses across dimensions, versions, and time before executing budgets and plans, but every superpower has its kryptonite. In this blog we discuss how to generate flexible and robust financial models powerful enough to drive strategic decisions and help your business leap over the competition in a single bound.

By Workday Adaptive Planning | August 25, 2020

There has never been so much data and insight available around accounts and individuals that enables organizations to do all sorts of activities more effectively and efficiently than ever before. From prioritizing your target universe to knowing when buyers are in-market, who to approach and which specific messages to use when targeting, data has opened […]

By InsightSquared | August 18, 2020

It’s common to design a SaaS renewal process that starts about 90 days before the date of renewal. It’s common, but that doesn’t make it right, does it? A great, proactive SaaS renewal process really starts the day the customer signs up. And renewal is just really one huge part of the overall initiative to retain customers. Let’s start with […]

By SaaSX | August 11, 2020

This week, the Mass Technology Leadership Council kicked off the Tech Compact for Social Justice with 60+ leading tech companies making over 180 commitments in their organizations to affect change. In Massachusetts, only 5% of tech occupation workers are African or African/American and 7% are Hispanic or Latino.  According to the Boston Globe, “the tech […]

By Lauren Kelley | August 5, 2020

Modern tools use integrations to eliminate rekeying data, share information across teams or departments, and gather intelligence to enable broader analysis and faster decisions. For most companies following a best-in-class technology strategy, the finance system is the hub for the other systems they use. It becomes a go-to point for making strategic decisions that affect […]

By Sage Intacct | August 4, 2020

Second quarter numbers are in and results are mixed.  Overall, companies were up for first half results 2020, but second quarter was tough.   COVID impacted sales for most companies in April and May, with many companies reporting sales coming back in June. We recently fielded a quick survey of SaaS companies to help the SaaS […]

By Lauren Kelley | July 31, 2020

At a Glance It often seems as if traditional strategy development processes have no place in the fast-moving, always changing technology industries. But in many respects the way top tech performers define a mission, shape a portfolio and allocate resources looks a lot like what companies in more traditional industries have done for decades. The […]

By OPEX Engine and Bain & Company | July 28, 2020

Mention the words “dark data” and it immediately conjures up images of the Matrix, hackers, black hat tactics, and so on. Yet despite its cyberpunk connotations, this couldn’t be further from the truth. Dark data is an incredibly useful source of information that SaaS businesses can tap into to improve their processes. But what is […]

By Lighter Capital | July 21, 2020

SaaS customer onboarding is critical—it’s really where the customer relationship is won or lost. There is a ton of great customer success information out there—but nothing that’s “block and tackle” specific, like an actual on-boarding cadence example. The key to great customer onboarding is pro-active communication and collaboration inside your organization and with your customer.

By SaaSX | July 14, 2020

When we published the results of the freemium survey earlier this year, we noticed respondents targeting the enterprise observed higher net dollar retention and lower churn than those startups targeting other segments. I wondered if we could observe any other patterns about enterprise businesses, so I produced this analysis of public companies with ACVs (annual contract […]

By Tomasz Tunguz | June 30, 2020

In honor of Canada Day (July 1) and US Independence Day (July 4th), we’ve compiled a few interesting facts and comparisons between the US and Canada, all in the spirit of information, curiosity, and some fun. Demographics: Population: US – 329.8M; Canada – 37.7M (projected for both countries as of July 1, 2020) Over the […]

By Lauren Kelley | June 29, 2020

Should you pursue growth at all costs, or is it more important to make sure that your margins are healthy, and that you’re not losing money with each new customer that you bring on board?

By Rob te Braake | June 29, 2020

What a difference a few months makes!  Back in January, 2020 looked so different. By early 2020, investment in the SaaS industry was at record highs and expected to hit even higher peaks.  In early Feb., TechCrunch wrote that VCs were putting an extra $1B into SaaS in 2020, in fewer deals, so more money […]

By Lauren Kelley | June 25, 2020

Average Contract Value is (“ACV”) is a vanity metric that should be looked at as part of a group of ratios that include number of qualified leads, close ratio, sales cycle, and other critical sales metrics. It shouldn’t be put on a pedestal. Here is why: The world’s biggest and best software companies tend to […]

By Sammy Abdullah | June 23, 2020

Over the years I’ve noticed how different CEOs take different degrees of ownership and accountability when it comes to the board of directors.  For example, once, after a long debate where the board unanimously approved a budget contingent on reducing proposed R&D spending from $12M to $10M, I overhead the founder/CEO telling the head of […]

By Dave Kellogg | June 16, 2020

Every few months I take a look at the top read blog posts on OPEXEngine, to make sure I have a solid understanding of the topics that you are looking for more insight on. And month after month, I see some of the same topics come to the top of the list. As a result, […]

By Lauren Kelley | June 11, 2020

You hear the terms SaaS, subscription, term licenses and perpetual license software tossed around frequently.  The terms aren’t universally understood, nor are the implications of each on the financial model of a company, so the following is an effort to provide an overview. At OPEXEngine, we pull apart the different nuances of each business model […]

By Lauren Kelley | June 11, 2020

In this third installment of our blog series ‘React, Adjust, Recover – Strategies for Professional Service Organizations During the COVID-19 Outbreak’, we focus on strategies to help businesses recover faster as restrictions begin to lift. You may be too busy reacting to the crisis to think about recovery at this moment, but research shows you […]

By Sage Intacct | June 9, 2020

Last week we published the most recent SaaS & Software benchmarks in our platform used by companies in their FP&A analyses for management, boards and investors. We’ve also added more filters by more granular break-outs of revenue, revenue growth rates and Average Contract Value, plus a filter for EBITDA, to help companies better compare themselves […]

By Lauren Kelley | June 4, 2020

If your startup is a SaaS (or any other business with customers paying on a recurring subscription basis), churn is a critical metric – particularly net revenue churn and gross revenue churn – that will need constant measurement. Without a clear picture of your churn rates, it’s impossible to know how your departing customers are […]

By Lighter Capital | June 2, 2020

If the shelter-in-place order were to remain in place for another 12 months, how would you change the way you run your business? Over the past two months, CEOs and founders have managed the turbulence imposed by the coronavirus onto their companies. Most of the time, we’ve implemented short-term plans. This week, the first companies […]

By Tomasz Tunguz | May 26, 2020

Here’s a shout out to Dave Kellogg’s Key SaaS Metrics podcast, recently released on Aznaur Midov’s SaaShimi series.  Dave does a terrific job explaining the current state of the art on important SaaS metrics.  The podcast is an excellent SaaS Metrics 101 listen even for experienced SaaS finance experts. Dave was most recently CEO of […]

By Lauren Kelley | May 22, 2020

It’s overdue. Predicting the onset of a recession is difficult, but a downturn likely will arrive soon, with the current economic expansion now more than 10 years old, long by historical standards. Signs of over leverage in the corporate sector, combined with geopolitical uncertainty—including the China–US trade war, Brexit and economic instability in some European […]

By OPEX Engine and Bain & Company | May 19, 2020

I’m delighted to share the first of what will be a regular feature highlighting the OPEXEngine member companies. The purpose of the spotlight series is to offer our members an opportunity to share new initiatives, insights, ideas, and benchmarking best practices with the SaaS and Software finance community. Special thanks to Bobby Jenkins, CFO of […]

By Lauren Kelley | May 14, 2020

As I’ve written about, progress normally comes at us gradually, but COVID-19 has changed that and rapidly accelerated our progress toward the future. Virtual work, on-demand delivery, and telemedicine were all catapulted forward due to this terrible tragedy. And I discussed in the previous post, it’s likely we’re going back to the old world for some […]

By Nick Mehta | May 12, 2020

In the third of our series of SaaS Quick Polls, we asked the benchmarking community of Software and SaaS companies about whether they expect more employees to be working remotely in the new normal, and how that was affecting office space and office budget plans for the upcoming year.  Approximately 50 companies shared information about […]

By Lauren Kelley | May 7, 2020

Last week, we had a terrific conversation with Jon Lau of InVision and Eric Lundeen from Xero about working remotely as finance professionals. Jon’s company, InVision, has always been 100% remote, no headquarters, no rent.  Eric’s company, the SaaS accounting vendor, Xero, is a publicly listed company in New Zealand and Eric is based in […]

By Lauren Kelley | May 7, 2020

As reported in the Boston Globe, MassTLC has been actively working throughout the COVID-19 situation to provide the timeliest information and insights to help our member CEOs make critical business decisions as they navigate the COVID-19 crisis. Through convening of tech CEOs, policy leader forums, member community programs, and research we are bringing relevant and actionable insights to our members. MassTLC […]

By MassTLC | May 5, 2020

In the early stages of a major business transformation, the leaders of a large global airline faced an urgent new priority—responding to the impact of Covid-19 on employees and passengers. Their first moves were grounded in empathy and compassion: keeping customers and employees safe, and maintaining the operational network long enough to return passengers home. […]

By OPEX Engine and Bain & Company | April 28, 2020

We are seeing business planning focus shifting to what the “new normal” might look like once the work from home orders are lifted for non-essential businesses. In the third quick poll in our series, we addressed potential changes to remote working and office space. We heard from members of the SaaS Community that they expect […]

By Lauren Kelley | April 23, 2020

When will a start up’s management team feel comfortable telling employees they’re safe to return to work? Is it when the government declares it safe? Or schools re-open? Or customer prospects agree to meet in person? Or when we each record a positive antibody test? How will we conduct meetings? With masks and gloves? What […]

By Tomasz Tunguz | April 21, 2020

OPEXEngine fielded a second quick poll to the SaaS Finance community between April 2-April 14, 2020 – over 60 individual companies participated, ranging from companies with under 100 employees to companies with more than 5000 employees.  Most of the companies were US and Canadian-based.  The anonymous and confidential poll covered changes to Q2, Q3, Q4 […]

By Lauren Kelley | April 16, 2020

Whether you’re trying to retain more customers or accelerate new customer acquisition, your customer success strategy needs to start with the right performance metrics. Today, I’m taking a look at 5 of the most revealing SaaS customer success metrics – from the ever-present customer churn rate, through to your SaaS product’s viral coefficient. 1) CUSTOMER CHURN RATE I won’t […]

By Cobloom | April 14, 2020

In November 2019, two spectacles occurred. The first is Dreamforce, Salesforce’s annual event and the largest software conference in the world. The second is Elon Musk announcing the Tesla Cybertruck. Benioff and Musk use these events strategically. They engender an operational cadence to Salesforce and Tesla. There’s no feeling like launch day. It’s the day […]

By Tomasz Tunguz | April 7, 2020

In late March,  we launched a SaaS peer community poll to see what companies are doing in light of the corona virus pandemic’s effects on 2020 budgets.  Approximately 70 unique companies participated, and we pulled together the results here.  Companies ranged from early stage to companies with over 1000 employees, the majority of respondents were […]

By Lauren Kelley | April 3, 2020

In the 1970s, J. Patrick Kelly, the first sales ops group leader, described his responsibilities as “all the nasty number things that you don’t want to do, but need to do to make a great sales force.” More than 40 years later, much has changed about sales processes and cross-functional collaborations, yet three things remain […]

By Workday Adaptive Planning | March 31, 2020

The potential business impact of the coronavirus pandemic has resulted in many of you contacting me with questions regarding the rapidly changing financial landscape.   As a result, we launched a series of short online polls, designed to provide real-time insight to help keep us apprised, and inform our forecasting and business decisions. Our first […]

By Lauren Kelley | March 26, 2020

The world of SaaS is awash with cryptic acronyms. If your business model relies on annual subscriptions, ACV will be a term that’s constantly on your mind as your company grows. So, what is ACV in sales and what is a typical SaaS ACV? We explain all that and more, below. What is ACV in […]

By Lighter Capital | March 24, 2020

Insight. The one true currency of a finance professional. If we don’t have any insights to share with our business stakeholders, then we’re not helping improve decision-making. A lot has happened on the insight front in recent years. We’ve talked about going from insights about past events to insights in real time. Few finance functions […]

By Workday Adaptive Planning | March 17, 2020

Last week, Mike Volpe, CEO of, and I had a terrific, hour-long discussion on the value of a metrics-driven culture at every stage of growth, from early stage to large enterprise. As Hubspot’s CMO, where Mike was part of the founding team through a successful IPO leading to a $2B valuation, to CMO at […]

By Lauren Kelley | March 13, 2020

Gross margin is one of the key metrics for e-Commerce businesses, and one of those metrics that businesses tend to be sensitive about. After all, would you reveal how profitable your e-commerce store is to random strangers on the internet? I didn’t think so. So let’s dive in what Gross Margin is, how to look at […]

By Rob te Braake | March 10, 2020

I am surprised by how many startup CEOs leave the board hanging at the end of the quarter.  As a CEO my rule of thumb was that if a board member ever asked me about the quarter then I’d failed in being sufficiently proactive in communications.  In tight quarters I’d send a revised forecast about a week before […]

By Dave Kellogg | March 3, 2020

Imagine that you have just signed an LOI for the acquisition of your company.  You, the CFO of a mid-sized SaaS company have spent the last 2-3 years getting your financials, your retention, CAC and other key metrics, in shape so you are offered an attractive valuation multiple.  Your investors are excited about seeing the […]

By Lauren Kelley | February 27, 2020

I have a bit of a love/hate relationship with the freemium model. Done right, freemium can lead to amazing success. One of the best examples is Dropbox, which Tomasz Tunguz called the “King of Freemium”. What makes the company unique, he argues, is how it transformed its free users into evangelists. “Unlike other SaaS companies, Dropbox […]

By Christoph Janz | February 25, 2020

At SaaS Capital, we have a lot of respect for GAAP financial statements. We think GAAP financials generally do a better job than cash-based financial statements in reflecting the underlying financial performance of a SaaS business. GAAP is the standard, and if your numbers are not based on GAAP, then they do not actually conform […]

By SaaS Capital | February 18, 2020

A Couple SaaS Generations Ago… Traditional software companies managed sales, product development, finance and HR in siloed organizations by function. Cross functional management was attempted but often not effective. In the early SaaS days, management structure was essentially the same.  Separate Sales, Marketing, R&D, Accounting/Finance organizations were headed by a senior executive. The siloed management […]

By Lauren Kelley | February 13, 2020

Business technology continues to evolve at lightning speed. As more applications transition to the cloud, information has never been easier to gather. Data is becoming more and more essential to remaining competitive and succeeding in any industry. However, despite the growing importance of data, many CFOs and Finance Leaders feel they’re underusing it in their roles as […]

By Sage Intacct | February 11, 2020

Whether you’re trying to work out how efficient your sales and marketing strategies are, or determine how profitable your current customers are, it’s vital to keep a pulse on the health of your SaaS business. Thankfully, there’s a simple performance metric that does both. Today we’re taking a deep-dive into one of the most crucial SaaS metrics around: customer acquisition cost (CAC). […]

By Cobloom | February 4, 2020

The SaaS 2020 outlook for CFOs reminds me of swash (look it up – turbulent water caused by an incoming wave hitting the shore and meeting the outgoing backwash from the previous wave).   More capital invested, more SaaS offerings, continued expectations of rapid growth are running smack into limits on the availability of qualified employees […]

By Lauren Kelley | January 30, 2020

As Chief Credit Officer at Lighter Capital, I work behind the scenes grappling with the data that informs all of our decision-making regarding financing deals, from revenue-based financing (RBF) to term loans and lines of credit. Similar to a venture capitalist (VC), I try to understand where startups are in their life cycles — and where they can expect to […]

By Lighter Capital | January 28, 2020

How analytics can guide companies from insight to action. Beyond generating insights, leading sales and marketing groups deploy analytics to prescribe specific actions that raise the odds of closing or expanding deals. Prescriptive analytics frequently takes three forms: guided marketing, guided selling and guided pricing. These forms of guidance all hinge on the organization having […]

By OPEX Engine and Bain & Company | January 21, 2020

Downward trending cost of goods (COGs) benchmarks are improving SaaS gross margins.  Competitive service offerings and new technologies are driving down costs to maintain SaaS infrastructures. As SaaS gross margins are rising, investors are becoming a bit more savvy about gross margin analysis, with increasing scrutiny of SaaS financials, especially in the wake of the […]

By Lauren Kelley | January 17, 2020

The typical SaaS company grows faster, loses more money, and has a higher valuation than product sale companies. Weighted Average Profitability Cash Flow from Operations Growth Price/Revenue Ratio Public SaaS Companies -8% +15% 33% 8.7x Public Software Companies +8% +28% 8% 3.3x Source: SEC filings – weighted average by company revenue Many factors drive the […]

By Cloud Strategies | January 14, 2020

If there’s one thing a finance professional can do forever, it’s analyze stuff. We’re never short of data to analyze, and there are always more details to be ironed out. We love analyzing stuff so much that we almost forget the purpose of doing the analysis. The purpose is to improve business performance through improved decision-making. That […]

By Workday Adaptive Planning | January 7, 2020

One SaaS metric we monitor closely is net dollar retention.  It tells you what percent of revenue from current customers you retained from the prior year, after accounting for upgrades, downgrades, and churn.  Formulaically it’s beginning of period revenue + upgrades – downgrades – churn all divided by beginning of period revenue.   If that formula […]

By Sammy Abdullah | December 31, 2019

Here’s how more advanced methods of automation, including machine learning, can help CFOs transform the finance function to be more of a strategic advisor to the business. In a recent McKinsey survey, only 13 percent of CFOs and other senior business executives polled said their finance organizations use automation technologies, such as robotic process automation (RPA) and […]

By Workday Adaptive Planning | December 24, 2019

In my last blog of 2019, I’d like to share some of my recent favorite reads. Favorite Reads The Power of Habit by Charles Duhigg “The difference between who you are and who you want to be is what you do.”  Charles Duhigg I had no idea this would be such a terrific book.  It […]

By Lauren Kelley | December 19, 2019

In the many years I’ve worked with SaaS companies, I continue to observe a surprising lack of standardization of SaaS metrics and performance reporting. My experience reinforces the fact that SaaS business model variants and approaches to measuring performance via metrics are still very much undefined. This is true even though selling software on a […]

By Eric Mersch | December 17, 2019

US SaaS companies need to take note of the growing number of world class SaaS companies based outside the US because the international landscape is shifting rapidly.  Increased funding activity in Canada, Europe and Asia/Pac is introducing more non-US competition in the SaaS marketplace.  More and better funded SaaS companies worldwide can be a challenge […]

By Lauren Kelley | December 12, 2019

By excelling at these moves, marketers ensure that their message breaks through the noise. At a Glance Getting a product, service or brand launch right matters more than ever for long-term success, which has become more difficult because of the proliferation of launches. Launch leaders have learned how to cut through the din of messages […]

By OPEX Engine and Bain & Company | December 10, 2019

Last week, Bessemer released interesting new research regarding the return on invested capital.  Three key take-aways from their analysis: Founders and CEOs should evaluate how effectively they are turning their capital into ARR instead of the size of their funding rounds. A new metric, called the Cash Conversion Score (CCS), shows the return on investment […]

By Lauren Kelley | December 5, 2019

THE BIGGER YOUR SAAS COMPANY IS, THE LARGER THE SIZE OF YOUR SUBSCRIPTION BASE. AND THE LARGER THE SUBSCRIPTION BASE, THE MORE DETRIMENTAL CHURN BECOMES. As your subscriber base grows larger, the loss of revenue caused by even a low churn rate will begin to compound. The number of new bookings needed to replace the customers […]

By SaaSX | December 3, 2019

Cash efficiency is one of our favorite metrics in SaaS. Measured as recurring revenue in the latest year / equity + debt invested, it’s every bit as important as growth. We did an analysis looking at the revenue, equity, and debt of 88 publicly traded SaaS companies at the time they went public. Using the […]

By Sammy Abdullah | November 26, 2019

During the annual budget and planning process, SaaS Finance leaders focus on making sure that resources are allocated appropriately across the company so the company achieves its performance goals – usually revenue and profitability goals – for the upcoming year.   Resource allocations should be fine-tuned by looking at how the Return on Investment (ROI) can […]

By Lauren Kelley | November 21, 2019

Think about some of the online tools you can’t live without. Chances are, you backup your work to Dropbox, keep your colleagues updated on your progress via Slack, and automate your marketing emails with a service like Mailchimp. And what all these companies have in common, according to Forbes, is that they’re product-led growth companies. The […]

By SaaSX | November 19, 2019

A widely held view on strategy in the 1980s defined two ways to compete: firms could pursue either a low-cost advantage (usually through scale) or a differentiation advantage (by building intimate customer relationships). The prevailing approach to running a firm at the time (what we call the professional management system) was perfectly tuned to steer most large companies […]

By OPEX Engine and Bain & Company | November 12, 2019

Can financial reporting analysis really help your business grow? Absolutely! To employ a data-driven finance approach, CFOs need to move finance functions up the analytic value chain to offer more detailed analyses, better forecasting, and increasingly granular information on products, suppliers, customers, and more. In turn, their analyses inform the business, increase corporate agility, and point the […]

By Sage Intacct | November 5, 2019

Heading into the 2020 planning season, SaaS FP&A teams are working to finalize 2020 budgets and planning. Over the past decade benchmarking software and SaaS companies, I’ve had the chance at OPEXEngine to work with hundreds of amazing Finance execs who work incredibly hard at getting the right data to support their company’s goals.  I’ve […]

By Lauren Kelley | October 31, 2019

SaaS pricing is difficult to master, and just a few tweaks to your strategy can have a huge impact on your revenue. Today, I’m looking at how you can determine the most appropriate value metric for pricing your SaaS product. WHAT IS A VALUE METRIC? A value metric is the metric that best correlates with where your buyer perceives […]

By Cobloom | October 29, 2019

Eighty percent of economic profit created by companies globally comes from 20% of the companies. Yes, the Pareto principle applies here too! What’s the secret sauce for becoming one of the 20%? The bad news? There is indeed a sauce and a recipe for how to make it. The good news? The recipe is not […]

By Workday Adaptive Planning | October 22, 2019

This article originally appeared on From targeted online advertising to more precise recommendation engines, consumer markets are bursting with innovation around machine learning and advanced analytics. While there’s less buzz around business-to-business markets, these innovations are changing the game in B2B as well, even in old-line industries selling what might be considered commodity products. A […]

By OPEX Engine and Bain & Company | October 15, 2019

The Subscription Show is coming to Boston in a few weeks at the World Trade Center.  I’m thrilled to be speaking there about SaaS Metrics and Benchmarks.  The show is 100% focused on subscription models, operations, pricing, marketing and subscription-centric technologies, and organized by Subscription Insider.  I’ll be talking about how investors are evolving the […]

By Lauren Kelley | October 10, 2019

SaaS multiples look great and made a nice comeback from Q4 2018: of the 72 SaaS companies we follow, the average public SaaS business is trading at 10.51x revenue while the median is 8.94x. Interestingly, the gap between the average and median has never been larger for the time period shown, meaning more attractive SaaS companies are being rewarded with big premiums.

By Sammy Abdullah | October 8, 2019

WeWork, a so-called tech company, just pulled its IPO, and a couple of recent high-flying IPOs – Peleton, Uber, Lyft – are trading below their opening prices.  Given market jitters about the economy, very high valuations of some private tech companies, and the massive $s invested by VCs and PE firms in the sector, it’s […]

By Lauren Kelley | October 3, 2019

As a finance leader, you’re intimately familiar with your company’s data and KPIs. But guess what? Most of your board members aren’t—and they don’t want or need that level of detail. What do they want? Like your CEO, board members are searching for trusted, strategic deputies who can provide high-level, holistic insight that helps them […]

By Workday Adaptive Planning | October 1, 2019

Have you heard about the Agile Operations Summit happening on November 6 in Boston? If you haven’t, we have four reasons you should attend’s Agile Operations Summit. This is the first time a summit of this kind will be bringing together Finance and Operations professionals from all over for a one-of-a-kind conference featuring amazing […]

By Lauren Kelley | September 26, 2019

This is the first in a three-part series where we address the main hurdles facing finance today, and identify some tools and technologies that can help you overcome these hurdles. Gone are the days when finance leaders were simply bean counters. As a finance leader, of course you must take on the responsibility for the integrity […]

By Sage Intacct | September 24, 2019

We often get questions from SaaS companies about GAAP versus non-GAAP expenses, and whether the benchmarks for expenses are distorted by GAAP accounting.  According to GAAP, expenses typically include charges, like stock option expense and other SaaS expense benchmarks which may be associated with acquisitions, and aren’t necessarily relevant to operational budgeting and planning.    GAAP […]

By Lauren Kelley | September 19, 2019

When it comes to FP&A forecasting, most companies base their long-range forecasts on static planning processes, rather than more relevant, dynamic plans that reflect the complexities of the business. Relying on a forecast that doesn’t enable continuous monitoring of company performance, instead of implementing a modern, rolling forecast approach, is like using an old-school road map to guide you […]

By Workday Adaptive Planning | September 17, 2019

Traditional software companies – and most tech companies in general –  are building Software-as-a-Service (SaaS) businesses.  Enterprise SaaS revenue is hitting the $100B run rate, according to Synergy Research in its most recent report.  That’s still only 20% of the total enterprise software market, but it’s growing quickly. An increasing number of customers demand the […]

By Lauren Kelley | September 12, 2019

You’ve found product market fit. You’ve hired a team, including some managers. Your initial, small customer base is very happy. You’ve discovered an initial channel of customer acquisition that’s working. You’ve raised a meaningful round of capital. And then, right then, product innovation decelerates to zero. The fast pace that characterized the past 12-18 months, […]

By Tomasz Tunguz | September 10, 2019

Eighty-four percent of new software today is delivered as a service (SaaS). Yet, as we turn the corner toward 2019, many businesses remain ill-prepared for the unique challenges and opportunities that come with moving to a subscription model and managing a SaaS business. The most noticeable pitfalls lie in the way SaaS businesses manage the […]

By SaaSOptics | September 3, 2019

Coming to the end of August, we have a fairly mundane topic – the difference between SaaS Bookings and Billings. It seemed like a good idea as the question has come up recently quite a bit. Metrics have no value unless their definition is clear, so it is worth spending a few minutes on the topic. […]

By Lauren Kelley | August 30, 2019

A recent survey from KBCM Technology Group (previously Pacific Crest Securities) shows the substantial impact that up-selling, including expansions, can have on your SaaS business. Up-selling is the key way to lower the cost to acquire revenue which in turn shortens the payback of the customer acquisition cost. Per the survey, the cost to acquire […]

By Paul Ressler | August 27, 2019

Did you ever hear the phrase “you are your numbers”? In most companies, business leaders live and die by their numbers regardless of the circumstances in which they hit or miss them. External conditions could be favorable, and you could hit them with little effort. Being faced with a lot of headwind and missing your […]

By Workday Adaptive Planning | August 22, 2019

“When you go B-2-B, it’s extremely important you start with the benchmarks. When looking at performance, you start with the best parts of sales and marketing to revenue and then you look at the mix of sales and marketing as percent of total sales and marketing and then you look at your performance versus benchmark, […]

By Lauren Kelley | August 20, 2019

In our engagements at FLG Partners, we often encounter situations in which companies default to systems to try to improve their business processes. Unfortunately, this approach can give a management team a false sense of security and almost always results in performance below expectations. At FLG, we typically find that process gaps are underestimated by […]

By Eric Mersch | August 13, 2019

Cloud channel strategies have evolved significantly over the past 20 years. Today there are a variety of SaaS channel sales models that companies have leveraged to exponentially increase sales and their potential customer base.

By Lauren Kelley | August 9, 2019

Over the years, I have become a “data hound” looking for every morsel of wisdom I can ge to help me make smarter decisions. The good news here: accurate data is king. You can’t effectively manage your business without accurate data. Getting it is not always easy but without it you risk making the wrong business decisions […]

By OPEX Engine | August 6, 2019

Cost of Revenue (COR) is the second highest expense bucket for most SaaS companies, yet it often gets overshadowed by the highest expense category, Sales & Marketing.  Sales and Marketing gets a lot of deserved attention since it can make or break a company’s revenue growth. Yet, COR spending directly affects the customer and losing […]

By Lauren Kelley | August 2, 2019

What valuations are founders asking for when they raise their Series A? Since May 2018, we’ve had conversations with 329 companies about their Series A rounds.  Below is aggregate data on these raises with names redacted to preserve confidentiality.  Figures like revenue, valuation, and round size are medians from conversations with founders.  Remember the valuations […]

By Sammy Abdullah | July 30, 2019

Long-time readers of our work may recall we have strived to shed a light on the opaque, confusing, and volatile practice of valuing private SaaS companies. As we near the mid-point of 2019, we thought it would be good to check on current private company valuation multiples. SaaS Capital is in a unique position to […]

By SaaS Capital | July 23, 2019

In the first half of 2019, total VC deal values hit $66B and is nearly on pace to match 2018’s record of $134.7B, according to the latest report released by PitchBook and the National Venture Capital Association. The size of VC funding deals continues to trend upward, while angel and early stage investing is holding its own in terms […]

By Lauren Kelley | July 18, 2019

In looking at this issue across several companies, I’ve noticed a disturbing trend / missed opportunity in how many SaaS companies classify the reason for customer churn.  Roughly speaking, if companies were hospitals, they’d too frequently be reporting the cause of death as “stopped breathing.” Yes, the patient who died stopped breathing; the question is […]

By Dave Kellogg | July 16, 2019

If you don’t prepare ahead of time, you could get stuck not producing the top 5 SaaS metrics that investors want to see when they’re considering whether to invest in your next round. Not preparing the right SaaS metrics by venture stage for your VCs can ultimately reduce valuation, or even kill your fund raise. […]

By Sage Intacct | July 9, 2019

We wish you a happy 4thof July with best wishes from all of us at OPEXEngine, the only INDEPENDENT SaaS benchmarking platform. In the spirit of the holiday, we’ve collected some 4thof July-related facts (since we love facts and statistics): The Declaration of Independence was signed by 56 men from 13 colonies. Only John Hancock […]

By Lauren Kelley | July 3, 2019

In a recent meeting, a founder asked me what I thought of the fundraising environment. My answer was: it’s become incredibly sophisticated along three dimensions: diversity of product offering, pricing sophistication, and efficiency of investment processes. If you read eBoys or Done Deals or Creative Capital, you’ll get a sense of the early days of […]

By Tomasz Tunguz | July 2, 2019

Average Contract Value is (“ACV”) is a vanity metric that should be looked at as part of a group of ratios that include number of qualified leads, close ratio, sales cycle, and other critical sales metrics. It shouldn’t be put on a pedestal. Here is why: The world’s biggest and best software companies tend to […]

By Sammy Abdullah | June 25, 2019

I often talk about B2B SaaS metrics from the perspective of what investors want. If you don’t have easy access to the metrics they expect (or, worse, if they’re wrong), your valuation could suffer, and that’s the last thing SaaS founders, CEOs and CFOs want to hear. But on occasion, I’ll hear prospects say they […]

By SaaSOptics | June 18, 2019

In this week’s 2019 State of the Internet presentation, Mary Meeker, the Midas List Kleiner Perkins/Bond Capital partner behind Spotify, Dropbox, Instacart, Slack, Square, Airbnb and Houzz, as well as Facebook and Twitter, captured how the internet is transforming the consumer and enterprise world, and even the political and regulatory sphere.   Given at Vox/Recode’s Code […]

By Lauren Kelley | June 14, 2019

Slack has transformed the way we work. By replacing email with beautiful and simple internal chat, Slack has productized productivity. Founded as a gaming company called Tiny Speck in 2009, the company’s initial product, Glitch, didn’t catch on as expected. So the business pivoted to commercialize an internal tool – a Searchable Log of All […]

By Tomasz Tunguz | June 11, 2019

Two/thirds of the SaaS Finance executives in this week’s webinar audience said they don’t feel they are getting a high level of return on their R&D investment. Tom Huntington, an experienced SaaS CFO and I explored the R&D “Magic Number,” and how the SaaS model and Lean Start-Up methodologies are helping to make R&D investment […]

By Lauren Kelley | June 7, 2019

Everyone loves recurring revenue and rightly so: it’s far more valuable than one-time revenue to VC and acquirers.  But, don’t forsake one-time revenue.  Whether it’s for services, onboarding, licensing, or some other one-time event, revenue of this type is incredibly valuable especially at early stages.   There are three big reasons it’s valuable: It’s a Source […]

By Sammy Abdullah | June 4, 2019

As the ways in which we do business change and evolve, the tools we use for SaaS revenue recognition should, ideally, change as well. Unfortunately, that’s not always the case. A recent study found that just 40% of CFOs felt confident about their system’s ability to provide relevant insights, and half reported that their systems did […]

By SaaSX | May 28, 2019

This week, we announced a strategic relationship with Bain Consulting.  Bain is using our benchmarks with their strategic consulting to help clients better understand how they compare to peers and market leaders, and where they can improve.  Data plus insights makes the analysis concrete and actionable.  Our decade long benchmarking of software and SaaS companies […]

By Lauren Kelley | May 23, 2019

After sales skyrocketed in 2003, Salesforce was bursting at the seams. Employees worked full-time in hallways and conference rooms because no one was prepared for the company’s explosive growth. Arguably the first true software-as-a-service (SaaS) company, the story of Salesforce exemplifies the dramatic expansion of the entire SaaS industry over the past two decades. Still, […]

By SaaSOptics | May 21, 2019

Sales is the Growth Engine Sales is the engine driving SaaS company value. Top and bottom line performance are totally dependent on the sales organization and its performance. And sales expense is typically the largest expense item on a growth SaaS company’s income statement. When scaling the business, sales typically averages roughly 30% of revenue, […]

By Lauren Kelley | May 16, 2019

Back in 2014, I wrote a post titled “Five ways to build a $100 million business”. If you haven’t seen it yet, the central idea of the article was to look at how many customers you need, for a given ARPA, to get to $100 million in annual revenue and what this might mean for […]

By Christoph Janz | May 14, 2019

We had a great discussion with Andrew Setness, VP Finance at DialSource this week on evolving the Finance organization as a SaaS company grows.  We talked about the processes, metrics and systems that change as a company goes from a Series A, to B, to C and beyond. Andrew, based in Sacramento, CA, highlighted that […]

By Lauren Kelley | May 10, 2019

I’m a huge practitioner of data-driven SaaS management. I believe that almost everything in a SaaS business can and should be measured. But there are two important caveats to measurement that I’ve recently seen overlooked. First, the data you use for KPIs or OKRs must be understood by your teams. And second, it must have […]

By SaaSX | May 7, 2019

A customer journey is typically defined as the sum of all the experiences that your customer has with your brand and product. In the case of your SaaS product, it includes interactions prior to buying, the actual buying process, on-boarding, continued learning about how to use the product including best practices, up-selling, technical problem resolution, […]

By Paul Ressler | April 30, 2019

Customer Acquisition Cost (CAC) is one of the key SaaS metrics to track and benchmark in your business.  By accurately calculating SaaS CAC and benchmarking it against peers and market leaders, companies can better allocate resources to improve growth and profitability.  And with accurate calculations, companies can identify the most profitable customer segments.  Yet, getting […]

By Lauren Kelley | April 26, 2019

Many finance teams consider board reports the most challenging type of report that they put together. And, in many ways, it’s because board members want so much more than numbers, such as nonfinancial information and customized analysis. Standard slide templates and data charts may satisfy most board members. But to really dazzle them—and establish the […]

By Workday Adaptive Planning | April 23, 2019

Employees are the biggest asset of a SaaS company as well as the single largest expense.  Compensation & benefits alone represent from 65% to 80%+ of revenue.   With the Enterprise SaaS market generating revenues of $20B a quarter, the venture community continues to pump funds into new and expansion companies. The resulting competition makes it […]

By Lauren Kelley | April 18, 2019

PagerDuty was founded in 2009 by 3 former Amazon engineers who were often on-call. To engineers, being on call means carrying a pager to respond to crises when software breaks or services go down. In the 10 years since that day, PagerDuty has built an exceptional business. Their product has evolved from on-call management, which […]

By OPEX Engine | April 16, 2019

PagerDuty was founded in 2009 by 3 former Amazon engineers who were often on-call. To engineers, being on call means carrying a pager to respond to crises when software breaks or services go down. In the 10 years since that day, PagerDuty has built an exceptional business. Their product has evolved from on-call management, which […]

By Tomasz Tunguz | April 16, 2019

Ever had a discussion or sat in a meeting to review metrics and the meeting didn’t accomplish much because the discussion got mired in questions about the metrics, not what the metrics were saying about the company’s performance? Or your executive team looks at metrics one way, but your investors, bank lenders, or new M&A […]

By Lauren Kelley | April 12, 2019

Anna and I are about a year into our SaaSX and Beacon9 stories and about 15 months removed from the acquisition of our SaaS company. We worked with some amazing recurring revenue SaaS companies in 2018. Our journey, our clients, and the new year have caused me to reflect on our mission to help SaaS […]

By SaaSX | April 9, 2019

Alignment between Finance and Sales, especially SalesOps, is critical for SaaS companies to effectively manage growth and expenses.  Miscalculating quotas, attainment and On-target Earnings (OTE) for account executives can drive up CAC, not to mention impact revenues and forecasts. Lauren Kelley and Eric Stephenson, Director of FP&A at Domo discussed in SaaS Conversations this week best practices […]

By Lauren Kelley | April 5, 2019

A founder posed me a question earlier this week: Do you have any data/perspective on whether it’s worth keeping the unassisted free trial flow vs. providing only one path which leads to a demo and an assisted free trial? This is a complex question. Let’s break it down.The unassisted free trial has benefits. There’s a […]

By Tomasz Tunguz | April 2, 2019

Just coming back from SaaSConnect, the annual meet-up of the Cloud Software Association (CSA), a terrific conference for SaaS and Cloud business development professionals.  If your partner exec isn’t involved with the CSA, they should be.  The organization is run by a dedicated group of volunteers, ranging from business development at Google and Microsoft to […]

By Lauren Kelley | March 29, 2019

By 2020, more than 80 percent of software providers will change their business models from “traditional” perpetual license and maintenance to subscription-based models. A perpetual model requires customers to pay a fee upfront to purchase a license for the system or application, whereas a SaaS model requires a monthly subscription fee. While some providers, such […]

By SaaSOptics | March 26, 2019

A benchmark floating around the SaaS blogging community is that SaaS net retention rates have to be over 100% – or your company isn’t valuable.  In fact, according to this school of thought, your net retention rate should be way over 100%, at least 125% or more.  Some investors are even associating net retention rates […]

By Lauren Kelley | March 22, 2019

This post won’t save your life, or your company.  But it might save you a few precious hours at 2:00 AM if you’re working on your company’s SaaS metrics and can’t foot your quarterly and annual churn rates while preparing a board or investor deck. The generic issue is a lot of SaaS metrics gurus […]

By Dave Kellogg | March 19, 2019

SaaS Sales and Finance collaborate together in planning, forecasting and day-to-day Sales management issues.   That collaboration can be smooth and extremely productive, or there can be less productive friction.  Working with hundreds of SaaS and software Finance organizations to collect and benchmark key Sales-related metrics, we’ve seen some best practices that tend to make the […]

By Lauren Kelley | March 16, 2019

A few days ago I wrote that there’s more than one path to $100 million. I argued that while it’s awesome to see that some companies are able to get from 0 to $100 million in ARR in 7-8 years or even less, trying to grow that fast may not be the best choice for […]

By Christoph Janz | March 12, 2019

SaaS Cost of Goods (COGs) is the fulcrum on which gross margin and key SaaS metrics balance.   SaaS Finance managers have to think strategically as they define exactly how to calculate COGs. More expense in the SaaS COGs bucket brings down gross margin but might improve Customer Acquisition Cost (CAC) – but this can have […]

By Lauren Kelley | March 8, 2019

“If you need more revenue, invest in Sales.” Why is that the default—some might say “kneejerk”—response to the basic question of how to make more money? One of the reasons Sales is such an obvious economic driver for companies is because its core Key Performance Indicator (KPI) is meaningful and well-defined: bookings. But for businesses […]

By Nick Mehta | March 5, 2019

Ever had a discussion or sat in a meeting to review metrics and the meeting didn’t accomplish much because the discussion got mired in questions about the metrics, not what the metrics were saying about the company’s performance? Or your executive team looks at metrics one way, but your investors, or bank lenders or new M&A […]

By Lauren Kelley | March 1, 2019

Today’s syndicated article was written by Sammy Abdullah, Co-Manager at Blossom Street Ventures. The chart below is a good set of data from recent SaaS IPOs and their R&D spend. Building out, maintaining, and upgrading a technology stack requires a constant commitment to developers and engineers, so what is an appropriate level of development or R&D expense […]

By Sammy Abdullah | February 26, 2019

There is no shortage of great advice on how to create a great fundraising deck. Our very own Michael Wolfe (not to be confused with the Fire and FuryMichael Wolff, by the way, nor with the fantastic comedian Michelle Wolf) wrote an excellent article about what should be in your fundraising slides some time ago. Mark Suster put together this great […]

By Christoph Janz | February 18, 2019

Investors love SaaS customer cohort analysis. It shows that you are analyzing your business, using data to identify areas of strength and weakness. It shows that you know your customers and can analyze which segments are likely to grow and which are at risk for churn. If you can identify the groups most likely to […]

By Lauren Kelley | February 15, 2019

How much can a customer success manager manage? I’d heard the wisdom of $1-2M in ARR per year and around 80 accounts. But I hadn’t come across any data. Last summer, Gainsight posted the results of their survey on the topic. The truth is most CSMs manage between $2-5M in ARR and somewhere between 10-500 accounts. But […]

By Lauren Kelley | February 12, 2019

This week I listened to Jeff Epstein, Bessemer partner and former CFO of Oracle, present to CFOs and finance execs at Intacct’s Finance Summit. The Summit content was well done and kudos to Sage Intacct for organizing it. Jeff described the stages, pre-money valuation and milestones at each stage, from pre-seed to Series G and beyond.  […]

By Lauren Kelley | February 8, 2019

Over the last year or two, many of SaaS Capital’s portfolio companies have initiated channel sales strategies, and many more are contemplating it. Given the trend, this was the focus topic at a recent portfolio company CEO roundtable. The stories and anecdotes from the room of about 10 portfolio company leaders shared a common theme: […]

By SaaS Capital | February 5, 2019

SaaS companies selling in the SMB market are structured operationally very differently from SaaS companies selling in the enterprise market.    Everything from Sales structures to Marketing to R&D is organized differently depending on whether you are selling a low-priced product to a high volume of customers, or selling a high-priced product to a smaller number […]

By Lauren Kelley | February 1, 2019

For any growing business, capturing and analyzing financial data is critical for scaling and making informed decisions. With the right performance metrics and insights at your disposal, you won’t be blindsided by changes in the business. You can proactively address issues quickly and drive growth confidently. And when you’re ready to seek capital, you can […]

By SaaSOptics | January 29, 2019

Driving revenue and revenue growth is one of the most important factors in the financial performance of a SaaS business, so getting the sales and salesOps metrics right is critical. In fact, for 2019, this might be one of the most important financial benchmarks you should track. We had a great webinar with SaaSOptics and […]

By Lauren Kelley | January 27, 2019

One of the most important metrics for B2C companies is customer acquisition cost or “CAC”.  One debate is whether the cost rises or falls over time.  The argument for rising CAC is the next marginal customer is generally harder to acquire than your last customer.  The argument for falling/stable CAC is that as companies get […]

By Sammy Abdullah | January 22, 2019

CAC can be difficult to calculate.  If you have 1000 customers paying $1,000/year plus 100 customers paying $10,000/year, is it good, bad or indifferent if your average CAC is $5,000/customer?  In the B2B SaaS world, most companies have different customer segments who pay somewhat or very different prices based on a variety of different licensing […]

By Lauren Kelley | January 17, 2019

While most companies put real thought into how they present numbers in their post-quarter board decks and other management reports, one area in which you’ll find a lack of discipline is in how they present quarterly sales forecasts to the board. They’re typically done as a quick update email to the board.  They’ll usually mention […]

By Dave Kellogg | January 15, 2019

Here are some predictions for 2019 and a review of my thoughts for 2018, many of which were wrong. The M&A market slows meaningfully, especially at the multi-billion dollar level. The recent seasickness in the public markets forces most CEOs adopt a more conservative approach to acquisitions. Facing large swings in valuation, these leaders may […]

By Tomasz Tunguz | January 8, 2019

Too many SaaS companies don’t have a strategic systems roadmap to support their growth.  As a result, they end up making endless tactical fixes and integrations to solve immediate problems but continue to struggle producing key reports and data analysis. In a recent OPEXEngine webinar, SaaS CFO Eric Mersch (Percolate and FLG Partners) and OpFocus […]

By Lauren Kelley | January 7, 2019

Preparing for an audit isn’t usually on anyone’s list of favorite things but it’s a necessary evil. For software-as-a-service (SaaS) businesses, audit preparation can be particularly stressful because the business model presents its own set of unique challenges related to financial operations that play a critical role in any audit. With the right preparation, however, […]

By SaaSOptics | January 2, 2019

Raising capital can be a challenging, sometimes grueling, process. In the last 20+ years, I have seen how the sausage is made from many different perspectives. Prior to starting SaaS Capital in 2007, I was a partner at a venture capital firm with a focus on funding Series A and B for software companies. It […]

By SaaS Capital | December 26, 2018

It’s the end of the year, and it’s time for us to make some predictions going into 2019. Here are the top five things we think the SaaS Boards are thinking about going into 2019. Top Five Things SaaS Boards are Thinking About Going Into 2019 1) Large tech cos are consolidating and driving M&A […]

By Lauren Kelley | December 21, 2018

The growing popularity of SaaS applications among end users, enterprise software buyers and investors creates tremendous pressure on traditional software providers to offer subscription versions of their applications. The business case for moving to SaaS is so strong that this business model is projected to dominate all software sales in the near term. According to […]

By Eric Mersch | December 18, 2018

Yesterday, at the Boston SaaS Finance Meet-Up for the SaaS and Software benchmarking community, we discussed some of the issues with determining customer count for B-2-B SaaS companies.  Last week, the same question came up at our San Francisco SaaS Finance Meet-Up as well, so it is clearly an issue.  Many companies, especially those selling […]

By Lauren Kelley | December 14, 2018

When I first heard about the Lifetime Value (LTV) to Customer Acquisition Cost (CAC) metric many years ago, the economics major in me got very excited. I was already well into the SaaS financing business at the time, and this ratio seemed like the most elegant way to express how the business model really worked. […]

By SaaS Capital | December 11, 2018

Best in class SaaS CFOs measure the percent of R&D spend associated with tech debt, just like they track financial debt.  Tech debt simply defined is the accumulated cost of development short cuts and outdated technology.  It is the interest a company pays for trade-offs made between quality and time to market – short cuts […]

By Lauren Kelley | December 7, 2018

Customers will pay you to build your SaaS product. It’s one of the great advantages of a SaaS model. Annual prepay contracts – wherein customers pay for a year’s cost on day – is a free loan from customers. And every startup can benefit from this advance. There’s only one requirement: you must be able […]

By Tomasz Tunguz | December 4, 2018

Savvy SaaS CFOs know that the best way to prepare for board approval of the next year’s budget and plan is to set the stage before the meeting.   This is the time of year when most SaaS companies are compiling and finalizing budget numbers. The hard work of getting Executive team agreement on the final resource […]

By Lauren Kelley | November 30, 2018

Your startup is just getting off the ground. You might have a few account executives and a sales leader in place; maybe some revenue and a handful of customers. The sales team costs real money, and the question before the company is: how do know what quota plan to assign to the account executives? I’ve […]

By Tomasz Tunguz | November 27, 2018

SaaS entrepreneurs have to go out on a limb and spend to grow.  That’s a fact of the SaaS world.  At the same time, spending before revenues come in and investing in growth is a big risk, and it requires tight discipline, like walking on a narrow balance beam requires tight discipline not to fall […]

By OPEX Engine | November 20, 2018

A really smart and experienced investor said to me the other day that with these 3 things, he could absolutely increase any SaaS company value (and would invest in doing so): The right operational data about the company and good, comparable benchmarks, Intelligent interpretation of the data, especially around go-to-market Improved business processes focused on […]

By Lauren Kelley | November 16, 2018

Scaling a startup from zero to $100M is 10% strategy and 90% execution. You’d never know that from reading the Web, because the advice you’ll find online is 90% related to strategy and 10% related to execution. This is the second post in a series that explores the challenges of scaling a startup through rapid […]

By Joel York | November 13, 2018

I think it would be hard to overemphasize the importance of upgrade and upsell strategy in SaaS product marketing. In an industry where free trials, freemium versions, bargain basement subscription prices and simply hoping to recover customer acquisition cost with first year revenue are the norm, few things are sweeter than a customer that actually […]

By Joel York | November 6, 2018

Earlier this week, we published a blog by Tomasz Tunguz, How the Economics of Professional Services Have Changed in Software. He demonstrates that professional services strategies and gross margins vary widely across public SaaS companies and have done for some time in the SaaS world. Despite large variances in professional services metrics, public SaaS companies […]

By Lauren Kelley | November 1, 2018

A founder asked me recently if there were any trends in the economics of professional services across public SaaS companies. I had examined the gross margins and share of revenue from professional services about 3 years ago. Professional services are consulting fees software companies charge to customers for software configuration, customization and education. What has […]

By Tomasz Tunguz | October 30, 2018

The OER (Operating Expense Ratio – ratio of operating expense to revenue) is a traditionally viewed as a measurement of efficiency. It can be translated to mean the dollars required to produce one dollar of revenue.  Typically, that dollar of operating expense was 90 percent payroll components. For early stage companies, the OER may be 3X.  […]

By Lauren Kelley | October 25, 2018

From time-to-time, you may need to find consultants to help you with your business.  Sometimes, those needs are high level, like setting strategies or marketing plans.  And, other times, those needs are more point solutions, like a pro in search engine optimization or product sourcing.  Whatever your need may be, there is most likely a […]

By OPEX Engine | October 23, 2018

In early markets, customers prefer entire solutions, not best in class point products. These solutions often include significant professional services and education. At the beginning of a new wave, most customers don’t understand the technology well. So, they seek experts to guide them. Companies that provide services and education often win the early market. They […]

By Tomasz Tunguz | October 18, 2018

Here’s a super interesting perspective from Sunir Shah, founder of the Cloud Software Association, a 2000 member organization dedicated to promoting partnerships and business development among SaaS companies that we like a lot.  From the early SaaS days when few believed the SaaS subscription business model could support partners and indirect channels, the SaaS partnership […]

By Cloud Software Association | October 16, 2018

I’ve written quite a bit about the public market software multiples. They’ve increased to near historic levels with forward revenue multiples approaching 9x. As the public markets have appreciated, something has happened that I didn’t expect. Some public companies are now fetching the mulitples of the most attractive private companies. I thought valuations between the […]

By Tomasz Tunguz | October 10, 2018

About two years ago, Marketo was publicly traded and valued at roughly $1.1B. Vista Equity paid $1.8B to take the company private, a 64% premium. At the time it was taken private by Vista, Marketo generated $241M in trailing revenue, growing at 35% annually. Its net income margin was -31%. Last week, Adobe announced they […]

By Tomasz Tunguz | October 2, 2018

Harvard Business Review published an article last year describing a new method they dubbed the Customer Based Corporate Valuation (CBCV) method focused on SaaS valuations and subscription companies. CBCV takes a “bottoms-up” approach to determining a company’s value, focusing on its customer base and the value of its customers.  By contrast, traditional valuation methods take a […]

By Lauren Kelley | September 27, 2018

As many of you know, Red Rocket has been looking for businesses to buy.  We have previously written about all the challenges that come with buy-side mergers and acquisitions work.   But, there is a new wrinkle we have been running into, that is worth talking about.  Most businesses we have looked at were managed […]

By OPEX Engine | September 25, 2018

For SaaS companies targeting fast growth to $100M and beyond, the company’s data management of its own business information can enable the growth path or bog it down.   Manual and “heroic” efforts to get the data out of business systems for reporting and analysis will get harder and harder to do as systems, records and […]

By Lauren Kelley | September 20, 2018

It seems a little late in the game for me to be asking a question like “What is SaaS?” But, I’ve always harbored a few embarrassing little secrets on the subject and I think it’s time I came clean. There is a classic Harvard Business School case study called Marketing Myopia by Theodore Levitt that […]

By Joel York | September 18, 2018

You hear the terms SaaS, subscription, term licenses and perpetual license software tossed around frequently.  The terms aren’t universally understood, nor are the implications of each on the financial model of a company, so the following is an effort to provide an overview. At OPEXEngine, we pull apart the different nuances of each business model […]

By Lauren Kelley | September 13, 2018

Your sales team is starting to close some terrific accounts. As your startup grows, your sales team will experiment with different sales techniques. For example, qualification, pricing, positioning, incentives and contract structure. This is a wonderful phase for a startup. However, there’s a common mistake to avoid. Your VP of Finance should model the impact […]

By Tomasz Tunguz | September 11, 2018

Numbers provide us a certain certainty. With their precision, they offer a sense of black and white, in or out. But, data and benchmarks alone aren’t enough. All the quantitative analysis in the world won’t lead me to the next great idea for startup. Those figures can’t create empathy, develop the right culture, or hire […]

By Tomasz Tunguz | September 6, 2018

Good SaaS CFOs manage increasingly complex organizations and responsibilities.  The Finance organization has grown to be one of the strategic assets of a SaaS company, managing the  numbers, planning for growth, contributing to strategic changes in Sales, Marketing and even R&D, not to mention closing the books every month, quarter and year. SaaS Finance:  One […]

By Lauren Kelley | September 5, 2018

As a SaaS business matures, the importance and value of SaaS metrics increase. Most SaaS businesses begin their journey down the SaaS metrics path by tracking recurring revenue in relation to customer acquisition costs. After building a solid customer base, churn becomes a priority. These fundamental SaaS metrics are all apparent in the standard SaaS […]

By Joel York | August 30, 2018

In honor of the last, hot days of summer and our love of Labor Day data and statistics, we dedicate this content to Labor Day in the U.S. on Sept. 3rd. The first observance of Labor Day was likely on Sept. 5, 1882, when some 10,000 workers assembled in New York City for a parade. […]

By Lauren Kelley | August 29, 2018

SaaS customer acquisition cost (CAC) is one of the key indicators to define a profitable SaaS business model.  The difference between customer acquisition cost and the lifetime value of a customer defines the value of the business. CAC is defined as the cost involved in acquiring one new customer.  The easiest way to determine customer acquisition […]

By Lauren Kelley | August 23, 2018

Over the last several years, many technologies have been developed to help accelerate and automate the sales and marketing functions. First, it was upper funnel tools that help drive customer awareness and consideration through marketing automation. Then came the middle and lower funnel tools that help drive customer evaluation and purchase through sales enablement tools, which I will […]

By OPEX Engine | August 21, 2018

Fifteen years ago, software company financial plans followed standard guidelines about sales and marketing expense targets. Traditional software sales and marketing expense aimed for 22%-25% of revenue, maybe 28-30% if strong revenue growth warranted it.  Anything north of that required a really good explanation for why and how the numbers would be reduced.  SaaS financial […]

By Lauren Kelley | August 17, 2018

You’ve just raised a round of financing. Your next step is to build your management team. There are several criteria hire an executive. Competency in the field, cultural fit, communication skills, management experience. All of those should be obvious. There is one that is often overlooked. Network. Recruiting is one of the most important responsibilities […]

By Tomasz Tunguz | August 16, 2018

I have written many posts about the importance of determining your industry size for strategic planning or investor pitch purposes.  But, determining your industry size is not always easy, and more importantly, determining your total addressable market (which I will define later), is even more important and an even more nebulous calculation.  So, here is […]

By OPEX Engine | August 9, 2018

In 2007, when OPEXEngine launched its first benchmarking of SaaS vendors, almost no SaaS companies in the data set were selling to end-user customers through a channel. Over a decade later, that statistic has changed dramatically. In the early days of SaaS, the idea was that subscription pricing did not allow a partner margin, so almost […]

By Lauren Kelley | August 7, 2018

I met a seasoned executive recently. He made a bold claim. “Management is an art, and one that is overwhelmingly undervalued in Silicon Valley.” I wondered, are we investing enough in our managers? Talent is the largest investment of an early stage company. 80%+ of startup operating expense flows to compensation. Retaining these employees is […]

By Tomasz Tunguz | August 2, 2018

Hiring and retaining skilled and productive employees in SaaS companies is an ongoing, competitive exercise.  Human assets are the biggest investment and a huge driver of SaaS company valuations – but a lot of organizations don’t check SaaS HR benchmarks regularly or keep it in front of management the way they do customer lifetime value, […]

By Lauren Kelley | July 31, 2018

Recently, people have been asking just where are we in the SaaS valuation cycle. I last updated the chart above more than six months ago. The answer is close to ten year highs. The chart above shows the median enterprise value to forward revenue multiple to multiple. Enterprise value is the market of a publicly […]

By Tomasz Tunguz | July 19, 2018

When I’m not completely absorbed with my agile marketing software startup, I do a bit of SaaS consulting on the side. SaaS colleagues come to me with a wide variety of problems from positioning to sales compensation to churn analysis, but lately I’ve noticed a common theme: poor SaaS customer alignment. SaaS businesses develop intimate, […]

By Joel York | July 12, 2018

The SaaS IPO and M&A market is extraordinarily strong.  Venture and PE capital inflows to SaaS companies also continue to be strong. With the second half of 2018 approaching for most SaaS and software companies, it is time to review and tweak second half budgets and plans. Now is a great time to benchmark your KPIs […]

By Lauren Kelley | June 26, 2018

There are five forces driving the startup ecosystem today. They are working together to reinforce a high valuation environment. These forces are: An infusion of capital into Startupland. There are many reasons for this. The money supply in the US has doubled in the last 10 years. A low interest rate environment means a low […]

By Tomasz Tunguz | June 21, 2018

Growth is the primary driver of value for early- and mid-stage SaaS companies.  In subscription models, you invest in revenue acquisition up – front and then generate value over time by managing churn. Acquiring new recurring revenues burns cash, mostly in Sales and Marketing. SaaS executives need to understand how efficient their organizations are in […]

By Lauren Kelley | June 19, 2018

Choosing the right go-to-market sales model for your SaaS startup can be a make it or break it decision. Choose right and you grow smoothly from seed funding to A round to B round and beyond. Choose wrong and you spend precious cycles chasing your tail as cash runs out. While most B2B SaaS startups […]

By Joel York | June 14, 2018

Over the past 12 months, a number of our benchmarking customers have either filed or completed SaaS IPOs. And Adaptive, a customer and partner, filed for an IPO in May and then announced in a surprise move on Monday its acquisition for $1.55B by enterprise SaaS company Workday for more than double (2.2X) the expected post […]

By Lauren Kelley | June 12, 2018

SaaS companies track the monies earned for selling products and services with a variety of different metrics, and it can be confusing.  Some companies track bookings, ARR and recognized revenues, others include billings.  Each of those metrics represents a different way of looking at the money coming into a company.  Some companies only include recurring […]

By Lauren Kelley | June 5, 2018

Intelex, a Canadian-based global leader in Environment, Health, Safety and Quality (EHSQ) SaaS, with offices in Toronto, Denver, and the UK, uses OPEXEngine’s SaaS Benchmarking platform, BenchmarkEngine™, together with Adaptive Insights budgeting and planning solution to drive operational analysis enabling fast growth. Intelex has grown to 500 employees with global offices and over 30 percent […]

By Lauren Kelley | May 29, 2018

Company X is a fast-growth SaaS company, surpassed $20M ARR in 2017, and is on a plan to hit $35M ARR in 2018, and $50M ARR in 2019.  Their growth plan is based on: more enterprise customers; opening an office in Europe/UK and increasing European revenue to 15% of total revenue; and adding new functionality […]

By Lauren Kelley | May 21, 2018

Last week, Hubspot announced strong Q1’18 results of 39% revenue growth and 44% customer growth.  These are great growth numbers, but more importantly, Hubspot announced a major evolution in its growth strategy. Here is how one successful SaaS vendor is evolving its model. Hubspot invented and evangelized the term “Inbound Marketing,” dramatically influencing the SaaS playbook […]

By Lauren Kelley | May 15, 2018

Sales is the revenue engine of any B-2-B SaaS company and thus absolutely critical to company growth. Sales is also often the biggest single departmental expenditure in the company – another reason why Sales efficiency is critical to ensure companies are getting the best productivity for their investment in the Sales organization and everything the company […]

By Lauren Kelley | May 8, 2018

SaaS G&A expense is surprisingly high.  Unlike traditional software companies where G&A expense was expected to be in the 12-14% of revenue range at the time a company went public and then drop to 8-10%, SaaS companies present G&A expense between about 15% to 20%, and sometimes more, of revenue.   Why is this and what […]

By Lauren Kelley | April 30, 2018

Subscription revenue management SaaS vendor Zuora’s IPO on Thursday, priced at $14, closed at $20 and valued the company at $2B.  2018 is shaping up to be a banner year for B-2-B SaaS IPOs:  Dropbox and Zuora already have listed, Docusign, Pluralsight, Smartsheet have filed and Qualtrics, Apttus, Github, SurveyMonkey and Slack are expected to […]

By Lauren Kelley | April 17, 2018

Women in tech are becoming more common every single day, but there is still significant disparity when it comes to what salaries are being offered to women versus men for the same technology jobs. recently released their third annual report, The State of Wage Inequality in the Workplace. is a tech hiring marketplace […]

By Lauren Kelley | April 11, 2018

Pricing in the SaaS world is particularly complicated. Pricing can make or break your SaaS company with its impact on both profitability and revenue growth – the two major indicators of company valuation. SaaS pricing is a fast-moving target and every SaaS CFO should be re-evaluating their company’s pricing on a regular basis.  As a […]

By Lauren Kelley | March 19, 2018

OpFocus recently met with fellow SaaS maven & long time friend, Lauren Kelley, who founded OPEXEngine a decade ago in Waltham, MA and built it into the premier Software as a Service SaaS benchmarking resource. Lauren’s held executive positions of her own in some of the industry’s most successful companies, and having advised hundreds of forward-thinking technology […]

By Lauren Kelley | March 11, 2018

Last week, (CRM) announced their FY 2018 results. The data indicates strength of their expansion model. Here’s why. SaaS companies, as well as investors in SaaS, watch Salesforce the original pioneer of the SaaS model.   The “No Software” company is the largest fast growth SaaS company in the world, keeping the momentum going even […]

By Lauren Kelley | March 4, 2018

The importance of unit economics and the associated metrics (CAC, LTV, LTV/CAC ratio) is well established in the SaaS world.  But how you calculate your operating numbers isn’t as well understood – these critical non-GAAP metrics aren’t consistently defined.  And changes in calculations – not the business – can have a real impact on your […]

By Lauren Kelley | February 27, 2018

Coming back from the annual SaaStr mega conference in San Francisco, it is clear that SaaS is huge, it is expanding and it is going to impact companies both in the United and States and abroad. The Expanding SaaS Sector The rapidly expanding SaaS sector numbers something like 10,000+ revenue-earning vendors.    While the majority of […]

By Lauren Kelley | February 19, 2018

One of the hottest trends in the evolving SaaS playbook is the influence of Account-Based Selling (ABS) and Account-Based Sales Development (ABSD). The Account-Based approach changes two important aspects of growing a SaaS company:  firstly, it changes business processes, and secondly, it changes organizational structures.  The focus is to pull together Marketing, Sales, Customer Success, […]

By Lauren Kelley | February 12, 2018

I’m jazzed to spend this week at SaaStr 2018 annual mega conference & SaaS gathering in San Francisco.   Over 10k + founders, VCs, and execs will be participating in the 3-day conference. The organizers have focused on including women and “under-represented” groups—40% of the speakers are women and 60% altogether between women and under-represented groups.  […]

By Lauren Kelley | February 5, 2018

Adaptive Insights and OPEXEngine announced an agreement that underscores the companies’ joint commitment to providing best-in-class benchmarking data to software-as-a-service (SaaS) and software companies. AdaptiveInsights, the leader in strategic corporate performance management (CPM), and OPEXEngine, the principal independent benchmarking platform for software and SaaS companies, can now better serve their mutual customers’ needs.  Under terms […]

By Lauren Kelley | August 14, 2017

Are we any good at SaaS product investment? No, not really.   I looked at 145 public and private SaaS companies with revenue of $5 million and greater in conjunction with the team at OPEXEngine.  Our goal was to find a relationship between product spending and payback once companies achieved product market fit.  What happens […]

By Lauren Kelley | June 26, 2017

Most SaaS companies know that to run your business profitably, it is important to measure SaaS CAC.  Yet, managing this metric over time can become increasingly complicated as a company expands its operations and divides its resources into both acquiring and retaining customers.  Calculating SaaS CAC correctly is not as simple as dividing total Sales […]

By Lauren Kelley | March 1, 2017

  We are frequently asked “how are companies allocating Customer Success expense” and where does the Customer Success organization sit among peer companies.  This issue often comes up among SaaS finance executives at the SaaS Finance Meet-UPS that OPEXEngine runs.  I’ll share some of what we’ve seen here.   We will continue to be working this evolving […]

By Lauren Kelley | January 25, 2017

The SaaS business model requires the integration and coordination of far more operations than traditional software models.  R&D, Sales, Marketing, Customer Success, Finance, and Operations all need to work together to produce profitable unit economics which are the basis of a successful SaaS company.  The annual budgeting practices process is a methodical way of allocating […]

By Lauren Kelley | November 22, 2016

Does your company provide free food for all employees every day or just on Wednesdays? Concierge services?  FastPass payments?  Free beer and wine?  Doggie day care?  Massage, acupuncture – the list goes on.  Tech companies large and small provide some of the most extensive company employee benefits for their employees in the competition for the […]

By Lauren Kelley | October 28, 2016

On the last day of August, as we go into the final stretch of Q3 and 2016, SaaS valuations are evolving.  Benchmarking the financials and operating metrics that drive these valuations is what OPEXEngine, the member-based benchmarking community for SaaS companies, is all about. Forward multiples have rebounded for companies maintaining strong revenue growth at […]

By Lauren Kelley | August 31, 2016

About 3/4ths of Sales expense is spent on sales compensation. Companies have always spent huge amounts of time and resource fine tuning their sales structure and organization but in the SaaS world, it is even more complex.  SaaS companies have to compensate for recurring revenues, renewals, find the right mix of incentives, targets and sales […]

By Lauren Kelley | June 30, 2016

Every CFO conference that I’ve been to in the past 5 years stressed the emergence of the CFO as a strategic leader of the company.  Study after study affirms that today’s CEOs expect CFOs, especially in the tech sector, play a strategic role driving company growth rather than just accounting for past performance and policing company […]

By Lauren Kelley | May 18, 2016

There are millions, okay, hundreds, of benchmarks floating around these days.  Sales productivity should be a, b or c funnel conversion rates are typically such and such a percent, or churn rates have to be no more than x or your company is in big trouble.  Whatever the metric, someone has a definitive answer for […]

By Lauren Kelley | March 29, 2016

Who does sales ops report to within your organization? According to Lauren Kelley, your company’s sales ops may be sitting in the wrong department. Kelley is the CEO and Founder of OPEXEngine, a member-based SaaS benchmarking company. She was previously the SVP of sales and operations at ATG, later acquired by Oracle, and also spent two […]

By Lauren Kelley | March 23, 2016

If a company can sell 1.5 deals in the time it previously took to sell one deal, you have 50% more revenue.  All other things being equal (ie., you don’t increase churn, increase discounting, etc), if you tighten up your sales cycle, you’ll increase revenue. There’s a fair amount written on SaaS sales cycle lengths […]

By Lauren Kelley | February 29, 2016

Benjamin Graham, father of value investing, famously described the stock market as a “voting machine.”  His star protege, Warren Buffett, would later expand that to “a voting machine over the short term, and a weighing machine over the long term.”  What the heck was Graham talking about, and why did Mr. Buffett feel the need to […]

By Lauren Kelley | February 8, 2016

Will risk adverse investors in both the private (VC and PE) and public markets this year impact SaaS operating benchmarks like revenue growth, profitability, hiring and a host of other operating metrics in 2016?  We’ve been getting calls from a number of saavy CFOs asking to see SaaS operating benchmarks from 2009 and 2010, just […]

By Lauren Kelley | January 28, 2016

In a recent forum dedicated to software and SaaS Finance leaders, organized by the SIIA and sponsored by OPEXEngine, Netsuite, Intacct and Grant Thornton, one of the best discussions dealt with preparing for and managing the optimal M&A exit for your company, with CFOs from acquired companies and M&A advisors from Grant Thornton. Key Takeaways: […]

By Lauren Kelley | December 22, 2015

We frequently have customer conversations where we discuss how things are moving around a SaaS income statement;  hosting costs into COGS, headcount from R&D to other departments, things like that.  Meanwhile, in another part of The Cloud, there are some large, important blocks of capital moving between  a companies balance sheet. The form of the capital is data […]

By Lauren Kelley | November 23, 2015

Annual Study Finds Private Software Industry and SaaS Firms Seeing Strong Growth,  More Hiring and Significant Venture Capital Flow. One year after reporting that private U.S. software companies saw the largest revenue gains since the recession of 2008, the 2015 Software & SaaS Industry and Benchmarking Report shows even greater acceleration in topline growth. Announced today, […]

By Lauren Kelley | September 29, 2015

The recession of 2008 took its toll on many different industries and the software industry was certainly no exception. With the recent release of the 2015 Software & SaaS Industry and Benchmarking Report on Sept. 10, produced by OPEXEngine, in partnership with the Software and Information Industry Association (SIIA), it was revealed that the software […]

By Lauren Kelley | September 24, 2015

We announced recently that average annual revenue growth for the fastest growth private SaaS companies had jumped from last year’s median of 100% to this year’s 150% annual revenue growth.  The press release got a lot of attention and was reported in InfoWorld, ZDNet, CPA Practice Advisor and the Kiplinger Letter, among others.    How […]

By Lauren Kelley | September 24, 2015

Bomgar is a venture-backed, mid-sized software vendor which has ranked in the Deloitte Technology Fast 500 for the past 4 years.

By Lauren Kelley | September 10, 2015

The tagline for General Catalyst Partners is “entrepreneurs investing in entrepreneurs,” and partners of the active venture firm are well known for lending deep operating experience to their portfolio executives’ growing businesses.  I’ve known Larry for years since we were both operating executives at various software companies.  Here’s his take on the key operating metrics that […]

By Lauren Kelley | September 9, 2015

Rally Software, based in Boulder, CO, is the leader in Agile Application Lifecycle Management (ALM) and IPO’ed April 2013.

By Lauren Kelley | September 9, 2015

Financial results for the Class of 9 B2B SaaS companies that IPO’ed in 2014

By Lauren Kelley | August 19, 2015

Even a 1% improvement in renewals can drive significantly higher valuations for a SaaS company over time

By Lauren Kelley | July 17, 2015

With any analysis, it is only relevant if you understand how the data was calculated and the context of how it relates to your business.  The data has to be credible for the analysis to be useful. And when comparing to benchmarks, it becomes doubly important to make sure that both the benchmarks are credible and […]

By Lauren Kelley | May 22, 2015

The social media world and business advisory firms, consultants and other pundits keep alerting businesses that the objective of return on investment (ROI) is diminishing in importance, or even dead, due to the increasing focus on return on user experience (ROE or ROX). We asked three experts to share their advice on ROI versus ROE as […]

By Lauren Kelley | May 5, 2015

OPEXEngine and the SIIA’s annual SaaS and Software benchmarking encompasses valuation models, sales and marketing operations, HR and employees, R&D, product and hosting, plus professional services (consulting) and customer service, launches April 7. The Software & Services Division (SSD) of the Software & Information Industry Association (SIIA), the principal association representing the software and digital content […]

By Lauren Kelley | April 17, 2015

COGs are the second highest expense bucket for most SaaS companies.  If you aren’t continuously delivering problem-free, high speed and secure access to your SaaS product, customers won’t stay.   Delivering high performance to an exponentially growing subscriber base costs a lot, which drives up COGs.  In addition, you need to invest in your hosting […]

By Lauren Kelley | March 18, 2015

After 8 years working with hundreds of SaaS and software companies (and about 60% of the SaaS IPOs over the past 5 years), one of the key ways that growth companies use our benchmarking data and services is for planning and budgeting. Planning and Budgeting Almost all of our clients use benchmarking to plan their […]

By Lauren Kelley | January 28, 2015

In the following Q&A, Lauren and David share lessons from each of their 25 years of technology management, tailored for SaaS companies on how fast growth SaaS companies are using key metrics to grow their businesses. Q: What are the do’s and don’ts in building a successful SaaS company? Lauren: SaaS is more complex and […]

By Lauren Kelley | December 22, 2014

2015 is fast approaching and it will be a big growth year for software and SaaS companies.  Here’s OPEXEngine’s predictions about how SaaS business models will evolve in the new year, as well as Nicholas Negroponte’s always insightful thoughts about future trends.    OPEXEngine’s  Business Model Predictions for 2015 “Winner take all” competition for market […]

By Lauren Kelley | December 15, 2014

I recently attended the 12th Annual MIT Sloan CFO Summit, which, as always, was great.  The title, the Future Forward CFO, articulated the theme that CFOs have moved from reporting the past to helping shape their company’s future.  A CFO’s position has grown beyond reporting accurate financial statements and historical analysis to proactive strategic planning, […]

By Lauren Kelley | November 25, 2014

Professional services for many SaaS companies have become an important way to on-board customers, keep customers satisfied with the product and using more features of an application or service, making it stickier.  As one CFO recently said, professional services are definitely a churn-reducer.  SaaS companies, particularly high growth, venture-backed firms, are pricing professional services as […]

By Lauren Kelley | November 12, 2014

Borrowing from the basics of Six Sigma, keep the following in mind as you define and manage your SAAS performance management and benchmarking: 1. Define the metrics All metrics should be clearly defined so that an organization can benchmark its success. One way to keep metrics understandable is to use the SMART (specific, measurable, achievable, […]

By Lauren Kelley | October 27, 2014

The private U.S. software industry is experiencing its biggest revenue gains since the recession, and both private and public companies are renewing their focus on investment in order to gear up for further growth, according to a study announced today by the Software & Information Industry Association (SIIA), the principal trade association for the software […]

By Lauren Kelley | July 18, 2014

Tracking performance metrics like monthly recurring revenues (MRR) and contracted monthly recurring revenues (CMRR), customer acquisition costs (CAC), renewal or churn rates, and customer lifetime value rate (CLV) is critical for driving growth at successful SaaS companies.  None of these metrics are GAAP metrics, though, and there is no auditing of the numbers.  Many companies […]

By Lauren Kelley | May 21, 2014

Last week’s “Deciphering Finance” conference in Irvine, California, organized by the SIIA was a great forum for sharing best practices among Finance leaders and peer networking.   I thought one of the many useful sessions was the discussion between an experienced CEO and his CFO which captured some of the key issues in that relationship.  Here’s […]

By Lauren Kelley | May 6, 2014

Security and performance investments, among other items, are driving up Cost of Revenue for SaaS growth companies. The ultimate goal of a subscription business model is to reduce the cost per subscriber and increase profitability. That does not mean, however, that cost ratios follow a smooth downward trend as revenues grow. 10 years after went […]

By Lauren Kelley | April 8, 2014

order essay online Annual Study Finds SaaS Driving Largest Revenue Gains, and Indications of Growth Outside Silicon Valley, Massachusetts & Other Traditional Tech Centers. Small and mid-sized companies in the U.S. software industry are thriving in the post-recession economy, with software-as-a-service (SaaS) firms consistently experiencing the greatest revenue growth and hiring expectations, according to a study […]

By Lauren Kelley | October 17, 2013

Imagine this scenario:  your company is relatively healthy and becoming established in the market but needs to keep up a fast growth pace or maybe even to grow faster.  Your heads of sales and marketing suggest that the best avenue to growth is that you need to add headcount in their respective departments.  Hard to […]

By Lauren Kelley | July 8, 2013

Render unto Caesar … I recently met with a client CFO of a $100M software (not SaaS) company and in the course of our conversation she repeated a question her CEO had put to her recently: “Why do we pay so much in taxes; why can’t we pay something more like what GE pays?” It […]

By Lauren Kelley | May 7, 2013

I recently spent two full days at a Retail Analytics and FP&A conference, which was terrific for many reasons. Retail FP&A (Financial Planning and Analysis) folks are very innovative in tying customer behavior to financial performance indicators. We in the software industry are true babes in the woods compared to retail companies on this one, […]

By Lauren Kelley | March 17, 2013

Good news for sales and marketing executives defending their budgets if they are planning on going public soon: The total amount of money in the sales and marketing budget probably isn’t going to be questioned too much. That doesn’t mean that how they spend their money isn’t going to be questioned, or the effectiveness of […]

By Lauren Kelley | March 5, 2013

SaaS Cost of Customer Acquisition (COCA) is one of the most critical SaaS metrics in determining whether a SaaS business is building a profitable business or not. COCA includes all sales and marketing expense aimed at bringing on new customers. In small and midsized companies, COCA is typically calculated as all sales and marketing expenses from a […]

By Lauren Kelley | February 24, 2013

Every SaaS business wants to have very low churn rates. Public SaaS companies often release renewal rates in the mid- or even high 90 percent range, without giving any detail about how the number was derived. But how do you interpret SaaS churn metrics? In our annual Software and SaaS benchmarking, we’ve been tracking churn […]

By Lauren Kelley | February 18, 2013