SaaS Quick Ratio
Formula
(New Revenue + Expansion + Resurrection) ÷ (Contraction + Churned Revenue)
Definition
SaaS Quick Ratio compares revenue gained through new customers, expansion, and resurrection with revenue lost through contraction and customer churn.
It provides a measure of the quality of revenue growth by showing how much revenue is added for each dollar of revenue lost.
Interpretation
A higher SaaS Quick Ratio indicates that revenue gains are large relative to revenue losses. A ratio of 1x means gains equal losses, while a ratio below 1x means losses exceed gains.
The ratio should be evaluated alongside retention metrics because strong new customer acquisition can produce a high Quick Ratio even when the existing customer base has meaningful churn.
Benchmark
- 1x
- Revenue gains equal revenue losses
- 4x
- Common SaaS reference point for efficient growth
In MetricFrame
MetricFrame calculates SaaS Quick Ratio from customer-level revenue movements by dividing New Revenue, Expansion, and Resurrection by Contraction and Churned Revenue.