Sculpted's SaaS Metrics Reference

SaaS operating metrics have no GAAP. There is no FASB, no SEC mandate, and no body with the power to enforce a single definition of net revenue retention, CAC payback, or ARR. So the same underlying numbers get reported under different conventions across the market. The divergence is not an edge case. It runs metric by metric, and a number is only defensible once you name the convention behind it.

This reference does not invent definitions. It anchors each metric to the most authoritative source that defines it. For metrics with a codified consensus formula, that source is the SaaS Metrics Standards Board. For coined metrics like the magic number, the burn multiple, or LTV:CAC, it is the origin author who first defined the term.

From there, the reference maps how definitions diverge. Every metric splits along three axes: composition (what goes into the number), basis (what it is measured against), and timing (the period and the moment of measurement). Two teams can both compute net revenue retention correctly and still report different figures, because they made different choices on these axes. The table below names those choices, metric by metric.

One exclusion is deliberate. VC blog posts and benchmark decks (a16z, Bessemer, and the like) are prominent, but they are not codified consensus, so this reference does not treat them as authorities.

Raise-critical

Metric	Diverges on	Defined by
Annual Recurring Revenue ARR Recurring revenue expressed on an annualized basis, excluding one-time and services revenue.	basis	Standards Board
Net Revenue Retention NRR The share of recurring revenue retained from an existing-customer cohort over twelve months, including expansion and contraction but excluding new-logo revenue.	composition, basis, timing	Standards Board
Gross Revenue Retention GRR The share of recurring revenue retained from an existing-customer cohort over twelve months after contraction and churn but excluding all expansion, so GRR is at most 100% by construction.	composition, basis, timing	Standards Board
Customer Acquisition Cost CAC The sales-and-marketing cost to win new business, expressed either as a per-customer cost (CAC), as the spend to win one dollar of new ARR (the CAC ratio, the codified form), or as the months for gross profit on new business to repay that spend (CAC payback).	composition, basis, timing	Standards Board
Churn and retention churn The rate at which customers (logo churn) or recurring revenue (revenue churn) is lost over a period, where churn is one minus the corresponding retention, and the two families (count-based and dollar-based, gross and net) answer different questions about the same book.	composition, timing	Standards Board
SaaS Magic Number Magic Number A sales-efficiency ratio: the annualized change in subscription revenue across two quarters divided by the prior quarter's sales-and-marketing spend, with no enforced or codified definition and only an origin author (Scale VP) as authority.	basis	Origin author
Gross Margin Gross Margin The share of revenue left after the cost of delivering the product (revenue minus COGS, over revenue), where the contested question is what goes into COGS, and where the "Subscription Gross Margin %" is the codified input the standards-board CAC-payback formula divides by.	composition, basis	Standards Board

Context

Metric	Diverges on	Defined by
Burn Multiple Burn Multiple A capital-efficiency ratio, net burn divided by net new ARR (lower is better), with no enforced or codified definition and only an origin author (David Sacks / Craft Ventures) as authority.	composition	Origin author
Lifetime Value LTV The gross-profit value of a customer over their expected lifetime (LTV), and the LTV-to-CAC ratio with its "at least 3x" rule of thumb, both popularizer conventions (David Skok), not standards: no codified standards-board definition exists.	basis	Origin author
MRR / ARR movement bridge movement The period-over-period bridge that reconciles beginning recurring revenue to ending recurring revenue through its movement terms: Beginning + New + Expansion - Contraction - Churn (and the open reactivation question) = Ending.	composition	Standards Board
Revenue recognition rev-rec Where a reported number sits among the money-states, which ASC 606 issue is in play, and why the reconstruction is deferred to raw source systems.	settled	Standards Board
Rule of 40 Rule of 40 A health heuristic that a SaaS company's growth rate plus its profit margin should sum to at least 40%, where the growth term is fairly settled but the profitability term is genuinely contested.	basis	Standards Board
SaaS Quick Ratio quick-ratio A growth-efficiency ratio comparing recurring revenue gained to recurring revenue lost in a period: (New MRR + Expansion MRR) / (Churned MRR + Contraction MRR), coined by Mamoon Hamid (Social Capital) and named as a convention, not a standard.	basis	Origin author