For subscription-based and SaaS companies, traditional accounting metrics (net income, gross margin %) don't fully capture business performance. Light provides dedicated SaaS metrics reporting, tracki...
Last updated Feb 18, 2026 · 4 min read
Critical metrics for SaaS businesses:
Subscription metrics:
Growth metrics:
Efficiency metrics:
Profitability metrics:
Light calculates all of these from transaction data.
Navigate to Planning & Reports → Reports. Light displays SaaS metrics including:
ARR represents total revenue from active subscriptions annualized.
Calculation: Sum all active subscription contracts, annualize (multiply monthly by 12), exclude one-time fees.
Example: If you have 100 customers paying $100/month, your ARR = 100 × $100 × 12 = $120,000.
Light automatically calculates ARR from AR invoices marked as recurring revenue.
MRR is ARR ÷ 12. Useful for month-to-month trend analysis.
Calculation: Sum all active subscription contracts for the month.
MRR growth: Track month-over-month growth (both $ and %).
Monitor MRR trend to identify inflection points in business growth.
NRR measures total revenue from existing customers, accounting for churn, downgrades, and upsells.
Calculation: (Beginning Month ARR + Expansion ARR - Churn ARR) ÷ Beginning Month ARR
Example:
NRR >100% indicates existing customers generate more revenue (expansion outpaces churn). NRR <100% indicates overall contraction.
Churn is the percentage of customers or revenue lost in a period.
Customer churn: % of customers who churned = Churned Customers ÷ Beginning Customers
Revenue churn: % of revenue lost = Churned ARR ÷ Beginning ARR
Annual churn: If you lose 5% of customers monthly, annual churn = 1 - (0.95^12) = 46%.
Low churn is critical for SaaS sustainability. A 5% monthly churn rate is typical for healthy SaaS (60% annual).
Analyze customer cohorts (groups acquired in the same period):
Example: Customers acquired via partners have 85% 12-month retention; customers acquired via ads have 60%. Shift budget to partner channel.
Light provides cohort reporting that automatically groups customers and tracks retention.
CAC measures how much you spend to acquire a customer.
Calculation: Sales & Marketing Expense ÷ New Customers Acquired
Example: You spent $100,000 on sales/marketing and acquired 100 customers in the month. CAC = $100,000 ÷ 100 = $1,000 per customer.
Compare CAC to LTV (see below). If LTV/CAC is 3:1 or higher, acquisition is efficient.
CAC Payback Period measures how long until a customer's revenue pays back the acquisition cost.
Calculation: CAC ÷ Monthly Profit per Customer
Example:
Shorter payback is better (less time to recoup investment). Typically 12-18 months is healthy.
LTV estimates total profit from a customer over their relationship with you.
Calculation: Average Customer Profit per Month × Average Lifetime in Months
Example:
LTV should be 3-5x CAC for healthy unit economics.
Magic Number measures how efficiently you convert revenue into growth.
Calculation: (Revenue This Quarter - Revenue Last Quarter) ÷ Sales & Marketing Spend Last Quarter
Example:
Magic Number of 0.7+ is good growth efficiency.
Light provides a dedicated unit economics dashboard:
Use this dashboard to track whether your business model is sustainable.
Track revenue from existing customers (upsells, cross-sells):
Healthy SaaS companies have 10-20%+ expansion revenue growth.
Track customers who downgrade to lower-tier plans:
Downgrades indicate product-market fit issues or pricing problems.
Project future SaaS metrics:
This is critical for fundraising conversations and investor relations.
Light displays your SaaS metrics; benchmark against industry:
Typical SaaS benchmarks:
If your metrics fall below benchmarks, investigate root causes.
Visualize customer retention by cohort:
Healthy cohorts show 80%+ 12-month retention. Declining curves indicate quality issues.
Light automatically generates retention curves for each cohort.
A SaaS profitability rule:
Rule of 40 = Growth Rate (%) + Profit Margin (%) ≥ 40
Example:
Example:
Target Rule of 40 score of 40+. Helps balance growth and profitability.
Another efficiency measure:
CAC Ratio = (Sales & Marketing Spend) ÷ (New ARR)
Example:
Lower ratios are better. Healthy is 0.3-0.5 depending on stage.
Beyond financial metrics, monitor:
These leading indicators predict churn and expansion.
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