SaaS Quick Ratio (Growth Efficiency)
The SaaS Quick Ratio measures growth efficiency by comparing revenue additions (new + expansion) to revenue losses (churn + contraction). It shows how much "good" revenue you're generating for every dollar of "bad" revenue lost.
New MRR: $20K. Expansion: $10K. Churned: $5K. Contraction: $2K. Quick Ratio = ($20K + $10K) / ($5K + $2K) = 4.3.
A Quick Ratio of 4 means for every $1 lost to churn, you're adding $4 in new and expansion revenue. Higher is better. It shows whether you're growing sustainably or just replacing churned customers.
Excellent
Good
Needs work
Danger zone
Early stage (pre-PMF): > 4 shows strong momentum. Growth stage: > 2 is healthy. At scale: > 1.5 is acceptable as growth rates naturally slow.
Two approaches: increase the numerator (more new business and expansion) or decrease the denominator (reduce churn and contraction). Usually cheaper to reduce churn.
They're complementary. NRR focuses on existing customer behavior. Quick Ratio includes new customer acquisition. Use both for a complete picture.
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