3/ Most SaaS entrepreneurs have a rather more informal understanding of revenue, or conflate it with MRR, cash flow, or other numbers.
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Replying to @patio11
4/ That's generally not problematic for operations at non-sophisticated scales, but signals "New to this" to people like CPAs/investors.
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Replying to @patio11
5/ MRR is "monthly recurring revenue", which is the most common number you'll hear a SaaS company quote. It's the least likely to be fudged.
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Replying to @patio11
6/ You may hear "run rate", which means "I am making a projection of the next 12 months of revenue given our present MRR and ASSUMPTIONS."
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Replying to @patio11
7/ Some folks like "run rate" because you get to quote a really big one if you're growing w/o yet being a big business. Trick is well known.
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Replying to @patio11
8/ Fun consequence of difference between revenue and cash: you can spend cash well in advance of recognizing revenue, e.g. annual prepays.
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Replying to @patio11
9/ This is the cheapest source of funds available anywhere, one reason all sane SaaS businesses love annual prepays.
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Replying to @patio11
10/ You book a liability for unearned revenue which gradually decrements over the course of the year. This makes SaaS look overleveraged.
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Replying to @patio11
11/ Larger companies have complicated computer programs which handle revenue recognition, often on a per-day basis over contract term. Yep.
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Replying to @patio11
12/ My favorite example is virtual goods, where GAAP says you have to pro-rate revenue for e.g. a magic sword over expected avg player life.
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13/ ACV means annual contract value or average contract value. Chiefly in SaaS it quickly communicates your market and sales strategy.
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Replying to @patio11
14/ If you say ACV $250 / $5k / $50k / $1.5 million then SaaS folks can pretty much draw out your entire org chart using only that info.
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Replying to @patio11
15/ For example, if your ACV is in the $50k+ budget, I will bet dollars to donuts that Sales is bigger than Engineering and has more pull.
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