TMT (Tech, Media & Telecom)
Why does churn compound against a SaaS company's growth as it scales?
Model answer
Churn is a percentage of an ever-larger base, so the absolute ARR a company must replace grows with the company even if the churn RATE is constant. At $100M ARR with 10% gross churn you must add $10M…
The full, human-reviewed answer is in the bank.
Sign up free and Daily 10 serves you 10 questions a day from all 1,500+ — or go Pro for unlimited reps.
More from TMT (Tech, Media & Telecom)
- What is the difference between ARR and MRR, and how do they relate?
- What is the difference between logo churn and dollar churn, and why can they tell different stories?
- Walk me through bookings, billings, and revenue for a SaaS company that signs a $120k one-year deal on day one and bills the full amount upfront. How much revenue is recognized in month 1?
- Why does billings = revenue + change in deferred revenue for a subscription company?
- A SaaS cohort starts the year at $100 of ARR. During the year it loses $10 to churn and downgrades and gains $15 from upsells to those same customers. What are gross and net revenue retention?
- How do you calculate CAC and CAC payback? A company spends $600k of sales and marketing in a quarter and lands 100 new customers, each paying $500 per month at an 80% gross margin.