Marketing budget and productivity benchmarks are hard to find, so when Dave "CAC" Kellogg and Ray "Growth" Rike first saw the ICONIQ Growth Marketing Budget and Productivity Report - they knew it was a great topic for this episode of SaaS Talk with the Metrics Brothers.During today's episode, Dave and Ray discuss several critical Marketing Planning, Budget, and Productivity benchmarks including:Marketing budget as a percentage of RevenueOn-line versus off-line spendProgram vs People budget allocationOnline Marketing spend by channelOff-line Marketing spend by programOutsourcing and Agency spend by program typeMarketing efficiency benchmarksPipeline contribution sourcesIf you are a B2B SaaS Chief Marketing Officer, Chief Financial Officer or CEO, this episode is chalked full of great data, insights and ideas for 2025 and beyond...See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
ServiceTitan, a vertical SaaS company for the trades recently filed their S-1 and went public on December 12, 2024. Dave "CAC" Kellogg and Ray "Growth" Rike discuss many details regarding the S-1 including the basic enterprise value creating performance metrics and some very interesting aspects of the IPO structure.During this episode, Dave and Ray discuss several aspects of the S-1 and IPO measured against industry benchmarks including:ARR Growth RateRule of 40Net Dollar Retention RateCAC Payback Period Gross Margin S&M as a percentage of revenueR&D as a percentage of revenueARR per FTERevenue breakdown by category (Subscription, Gross Transaction Value, Services)Down round from last rounds of funding as a private companyCompounding IPO RatchetDifferent classes of stock and voting rightsOne of the sources of information used for this episode was the Meritech Capital S-1 breakdown which can be read here.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
KeyBanc Capital Markets in partnership with Sapphire Ventures recently published their 2024 SaaS Metrics Benchmark report. During today's episode, Dave "CAC" Kellogg and Ray "Growth" Rike dive into this years highlights including:Growth RatesNet and Gross Revenue RetentionRule of 40Go-to-Market Organization RatiosMarketing Strategies and ProductivityHuman Capital EfficiencyValuation Multiples - By Growth RateIf you are a SaaS executive, employee or investor this episode is a great listen!See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
The Sales Operations function evolves dramatically as a company scales and Meghan Gill, SVP Sales Ops and Sales Development at MongoDB has lived that reality. Meghan started in Marketing at MongoDB as employee number 8 as the first non engineering hire, and then seven years later took over Sales Operations in preparation for their IPO.CAC and Growth discuss the evolution of Sales Ops with Meghan and discuss several key topics including:The career journey from Marketing to Sales OperationsThe evolution of Sales Operations post IPOSales Operations vs Revenue OperationsGTM changes required when converting to Usage-Based PricingCentralized planning to decentralized global planning - an operations perspectiveHearing how the role of Sales Operations evolves from pre IPO to post IPO and continuing to $2B+ directly from a person who has been in the middle of making that journey possible makes for a highly informative conversation and a unique guest centric SaaS Talk with the Metrics Brothers episode!!!See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
CAC and Growth discuss the recent Scaling SaaS from $1M to $20M ARR ICONIQ Growth report that provides a long term view on the performance metrics benchmarks that SaaS companies exhibit at granular stages of growth including $5M, $10M, $15M and $20M ARR.Benchmarks covered include:Enterprise Five Benchmarks (Median and Top Quartile)Growth Plateau Challenges started at $25M ARRNew Logo GrowthOperating Expense TrendsAnnual Contract Value Growth by StageNew ARR vs Expansion ARRARR per FTEBurn MultipleThe ICONIQ Growth "Scaling SaaS from $1M to $20M ARR" Report provides unique insights and perspectives on the benchmarks that define success as measured by both the top quartile and median benchmarks for the 107 private SaaS companies that are included in this research.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
The Remaining Performance Obligation (RPO) metric has become a more standard metric that public company Wall Street analysts have started to follow closely to help evaluate the bookings growth of recurring revenue companies. CAC and Growth cover the following topics regarding RPO including: Why was the Remaining Performance Obligation createdWhat does the Remaining Performance Obligation (RPO) metric tell investorsHow is RPO calculatedThe difference between RPO and deferred revenueHow multi-year agreements impact both the RPO and Deferred Revenue calculationsIf you are interested in how public company analysts use the RPO metric or are just a student of the SaaS industry - this episode dives deep into an increasingly important SaaS investor metric!See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Customer Retention is a hallmark of the SaaS recurring revenue business model. But what is the primary metric to measure the cost of retaining each customer, how is the efficiency to renew ARR calculated, and what goes into that metric?Dave "CAC" Kellogg and Ray "Growth" Rike go deep into the components of Customer Retention Costs and the value in measuring including:The benefits of measuring Customer Retention CostsCustomer Retention vs Customer Renewal CostsThe Components of Customer Retention CostsTotal ARR or Renewed ARR - which is the best to measure Retention Costs againstThe SaaS industry has multiple metrics that measure the cost to acquire a customer (Customer Acquisition Cost), the efficiency of acquiring new customers (CAC Ratio), the payback period on Customer Acquisition Costs (CAC Payback Period) and how much recurring revenue is retained every period (Gross Revenue Retention- GRR)...but no standard metric that measures the efficiency of retaining and renewing customers.During this episode, CAC and Growth dive deep into the topic of the Customer Retention Cost Ratio and the Customer Renewal Cost Ratio!See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
New investment announcements in B2B SaaS companies are not quite what they seem!? Over the past few years, public announcements have moved from how much capital was raised to what the valuation of the company was at funding. BEWARE - those valuation headlines are full of nuance and details that are not disclosed!!!Dave "CAC" Kellogg and Ray "Growth" Rike - also known as The Metrics Brothers go deep into the details that are left out and are present behind the headline valuation announcements including:Class of stockLiquidation preferencesParticipating preferencesRedemption RightsSecondary SalesIf you are in the B2B SaaS industry and interested in the "story behind headline valuation announcements" - this is a great conversation to hear!!!See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Contracted Annual Recurring Revenue (CARR) and Annual Recurring Revenue (ARR) are commonly used terms in the SaaS and Cloud Industry but are not standardized leading to inconsistent calculation. In fact, they were the first two metrics the SaaS Metrics Standards Board published standards upon.Dave and Ray discuss the current definitions, calculations and how Usage-Based Pricing is impacting the historic ARR reporting model.During today's episode CAC and Growth cover the following topics:Contracted Annual Recurring Revenue (CARR) - Definition and CalculationAnnual Recurring Revenue (ARR) - Definition and CalculationUsage-Based Pricing and impact on revenue reportingIntroduction of Recurring and Re-ocurring revenueReporting variable revenue from Usage-Based Pricing modelsWith ARR not being a FASB / GAAP Revenue reporting standard - the opportunity and challenges for having multiple calculation and reporting models is easy to identify - but hard to rectify.If you are using, considering using or do not use Usage-Based Pricing this conversation and episode is a great listen.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Free Cash Flow is a key metric for any SaaS investor and thus for SaaS CFOs and CEOs. Moreover Free Cash Flow Margin is a key variable in the Rule of 40 - a key enterprise value creation metric. Dave "CAC" Kellogg and Ray "Growth" Rike dive deep into the value behind the FCF metric and the different ways to calculate!During this episode Dave and Ray discuss the following elements of Free Cash Flow:Where to find Free Cash Flow on public company filingsThe three primary Cash Flow statementsDifferent formulas to calculate Free Cash FlowThe impact of capitalizing sales commissions and R&DThe Rule of 40 calculation - Free Cash Flow as the profitability metricFree Cash Flow is not a metric limited to B2B SaaS companies but has become an increasingly important metric to SaaS investors as the industry matures as measured by how Enterprise Value has become more correlated to a blend of growth and profitability.This episode is a great listen for anyone interested in the core financial metrics that impact the value of a B2B SaaS company! See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Bessemer Venture Partners recently released their 9th annual Cloud 100 Report. Dave "CAC" Kellogg and Ray "Growth" Rike dive deep into the impact of AI companies on the top 100 private cloud companies which increased their aggregate enterprise value to $820B and increased their growth rate to 70%!Key highlights Dave and Ray discuss include:Aggregate enterprise value of the Cloud 100 increased 25% year over yearAverage growth rate increased from 55% in 2023 to 70% in 202497% of the Cloud 100 will be over $100M ARR by the end of the yearTop 10 companies in the Cloud 100 represent ~ 30% of the total Enterprise ValueAi companies represent the top category of the Cloud 100 EV (21% of total)EV:Revenue multiples are down YoY (23x) but still at very attractive levelsAs a follow-on to the BVP "State of the Cloud 2024 Report" the Cloud 100 highlights the era of AI has moved from hype to reality as measured by growth rates and enterprise value!If you are interested in the latest "CLOUD" industry trends as measured by company value, revenue growth rates and industry impact this episode is a must listen!See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Go-to-Market continues to be a trending topic for the majority of B2B SaaS companies being challenged to optimize efficient revenue growth. ICONIQ recently published a report entitled "State of GTM Benchmarks" and Dave "CAC" Kellogg and Ray "Growth" Rike discuss the report's findings and what the benchmarks mean to both operators and investors.Key GTM benchmarks covered during today's episode include:Growth Rate Trends ('24 vs '23)Customer Acquisition Logo VelocityPipeline Coverage RatioPipeline Conversion RatesPartner Sourced ContributionsExpansion ARR vs New Logo ARRIf you are a B2B SaaS CEO, CFO or GTM executive this episode is full of interesting insights based upon the most recent GTM benchmarks.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
The SaaS Mendoza line highlights the slope of the long term growth rate that investors expect and operators should target on a path to IPO. Dave "CAC" Kellogg and Ray "Growth" Rike break down the updated expectations.Veteran software VC, Rory O’Driscoll of Scale Venture Partners proposed a theory to identify the growth rate below which a company may not be on the VC-to-IPO trajectory.In 2018, Rory started with an analysis of SaaS companies at the time of IPO. In 2018, SaaS companies going public had a minimum run rate ARR of $100M and at least a 25% forward growth rate. He then examined growth rates over time and observed that the growth persistence - which represents the rate of growth decay year over year, that public SaaS companies grew at 80-85% of their previous year’s growth. This metric is commonly known as "Growth Endurance".Dave and Ray discuss the new reality of the SaaS Mendoza line, with the most recent data in 2023-2024 suggesting that a SaaS company must have at least $400M - $500M" in revenue before they can IPO as evidenced by the recent Klaviyo, OneStream and Rubrik initial pubic offerings.CAC and Growth highlight other common "growth expectation" models including the T2D3 (Triple, Triple, Double, Double Double) and 56789 models. If you are evaluating what it takes for early stage company to attract new investors as your growth on a path to IPO - this conversation is full of great insights and perspective on investor expectations.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Go-to-Market trouble shooting is a very common activity in 2024 as B2B SaaS companies continue to face growth and especially efficient revenue growth challenges. In this episode Dave "CAC" Kellogg shares his top-down GTM trouble shooting method which boils down into two primary categories:Pipeline CoveragePipeline ConversionDave and Ray dive into the details on the key metrics to evaluate and what they tell a SaaS GTM operator about the current state of their GTM performance. Key insights are provided across multiple topics including:Week 3, Day 1 Pipeline Coverage RatioWin Rate vs Pipeline Coverage RatioPipeline Conversion MeasurementPipeline Source and CompositionCAC also provides his most basic insight into the top two questions a CEO should be asking which are:Are we giving sales a chance to hit the number (pipeline coverage)Is Sales converting enough opportunities into customers (pipeline conversion)If you are a CEO, CFO or GTM leader in B2B SaaS and are responsible for GTM performance and/or evaluating GTM performance this episode is a great listen! See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
OneStream went public on July 24, 2024 and Dave "CAC" Kellogg and Ray "Growth" Rike dedicated this episode to discussing their S-1 and Initial Public Offering (IPO). OneStream, the company offering their Digital Finance Cloud to the Office of Finance has a long history including being self-funded, being acquired by Private Equity (KKR) in 2019 and beginning the transition from a perpetual license software company to a SaaS company in 2020 on the path to their IPO.During the episode, Dave and Ray discuss multiple aspects of the OneStream public offering including:The history of OneStreamKKR investment in 2019IPO pricingUmbrella Partnership Corporation (Up-C)Stock Class Voting RightsFinancial Performance Metrics TrendsIf you are a student of the SaaS industry and/or are interested in the details behind a company that serves the Office of Finance this episode is a great listen.This is the 50th episode of SaaS Talk™ with the Metrics Brothers and don't miss CAC and Growth sharing credits to the people who made SaaS Talk a reality!!!See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Burn Multiple is a metric created by David Sacks to measure the capital efficiency of ARR growth in B2B SaaS companies. In this episode, Dave "CAC" Kellogg and Ray "Growth" Rike discuss alternatives to the Burn Multiple and then dive into the details of the two primary burn multiple components which are Net Burn and Net New ARR.There are multiple metrics that attempt to measure capital efficiency of B2B SaaS companies including:Hype Ratio = Capital Raised / ARRCash Conversion Score: Current ARR / (Total Capital Raised to date - cash)Efficiency Score = Net New ARR / Net Burn The Burn Multiple uses two primary components in it's calculation which is: Burn Multiple = Net Burn / Net New ARRNet Burn = Revenue in the Period - Operating Expenses in the PeriodNet New ARR = New Logo ARR + Expansion ARR - Down-sell ARR - Churned ARRWhat is a good Burn Multiple? It depends on the stage of the company, but let's use David Sacks benchmark framework from his original Burn Multiple article in 2020:Amazing = < 1xGreat = 1.0 - 1.5xGood = 1.5 - 2.0xSuspect = 2.0 - 3.0xBad = >3xIf you have an investor focused on the Burn Multiple or you have heard about the Burn Multiple but want to understand the details and nuances this episode is a great listen!See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Bessemer Venture Partners recently released their "State of the Cloud 24" which included the catch phrase "The Legacy Cloud is Dead - Long Live AI Cloud!" Dave "CAC" Kellogg and Ray "Growth" Rike discuss the report and the opportunities and threats to traditional SaaS companies.Topics discussed include:Social Media Buzz and Sources of "SaaS is Dead"Gen AI VC Funding Categories and SourcesTop Five Gen AI Trends Trend 1: AI foundation models set the stage for Big Tech’s new battle-of-the-century Trend 2: AI turning all of us into 10X developers Trend 3: Multimodal models and AI agents will transform human relationships with software Trend 4: Vertical AI shows potential to dwarf legacy SaaS with new applications and business models Trend 5: AI Brings Consumer Cloud Back from the DeadIf you are in a SaaS company evaluating how best to maneuver the risks and/or capture the potential of Gen AI, the Bessemer State of the Cloud report is a great read and this episode with CAC and Growth is a great listen!See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
McKinsey recently published a report entitled "Navigating the Generative AI Disruption in Software" that Dave "CAC" Kellogg and Ray "Growth" Rike discuss in his episode.Some of the primary topics discussed include:GEN AI penetration velocity today vs SaaS in the early daysGEN AI impact on switching from traditional SW/SaaS vendorsWhere will the rewards of Gen AI goImpact on SaaS Growth and Churn RatesOne of the most interesting parts of the report and this episode is that expansion growth rates of software will increase for those with embedded generative AI. In addition, the adoption of Generative AI solutions will be spread across three primary modalities of Gen AI software including:Native Generative AI Point SolutionsBroader platforms with embedded Generative AIInternally developed Generative AI softwareIf you are a traditional SaaS company and are looking to navigator the unchartered waters of the Generative AI software era, the McKinsey report and this episode are great sources of ideals and insights.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
What is the difference between the price and value of a SaaS company? How do metrics such as Enterprise Value to EBITDA multiples play a role in this discussion? Dave "CAC" Kellogg and Ray "Growth Rike discuss the topic on this episode of SaaS Talk with the Metrics Brother and cover a wide array of topics including:What is a SaaS company worth?What is the definition of "price vs value" in the stock marketExamining Valuation Multiples What They Miss, Why They Differ, and the Link to FundamentalsHow Cash and Debt impacts Enterprise ValueEV/EBITDA vs EV/FCF vs EV/Revenue MultiplesAn inspiration for this episode was from a paper written by Michael Mauboussin with the title: "Examining Valuation Multiples What They Miss, Why They Differ, and the Link to Fundamentals". You can read the paper by clicking here.If you are a SaaS professional or even just interested in learning more about how SaaS companies are valued, this conversation is full of interesting insights and details on the concept of SaaS company valuations.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Trouble shooting Go-to-Market (GTM) issues is a critical competency to master for every SaaS company as they face the pressures of lower growth and reduced revenue growth efficiency. Dave "CAC" Kellogg and Ray "Growth" Rike introduce a GTM trouble shooting framework that addresses the five primary opportunities to improve GTM efficiency.The five key areas of Go-to-Market efficiency opportunities include:Pipeline GenerationPipeline ConversionWin Rates + ACVCustomer RetentionCustomer ExpansionCAC and Growth discuss some of the key metrics that measure the performance and health of each of the above areas. In addition, as two former B2B SaaS operators, they cannot help but dive into some of the key issues and solutions that go beyond "trouble shooting" and move into potential solutions to enhance revenue growth efficiency and improve performance.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.