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Subscription-based business models are taking hold across a wide variety of industries. The attractiveness of more predictable revenue streams and increased company valuation are compelling. However, the financials of these types of businesses are dramatically different from that of their predecessors. Metrics that define success for companies that leverage recurring revenue models are not the traditional metrics that have defined success in the Pre-Subscription Economy. Savvy CFOs know: the best-managed subscription businesses rely on a new core set of key metrics to improve daily operational performance, increase productivity, and drive profitability. Is your financial software giving you the right visibility into the metrics you need to deliver optimal business performance in the Subscription Economy?
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Ask, Share, Learn – Within the Largest Community of Corporate Finance Professionals
Defining Success in the Subscription Economy: Metrics that Matter
• Discover the Key SaaS KPIs, their underlying drivers and why they matter
• Define the actions your company should take to more effectively manage your subscription business
• Discover why depth well beyond backward looking GAAP based financials is necessary to assess the financial health of a subscription-based business
After attending this event you will be able to:
Learning Objectives
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Welcome to Proformative
Ask, Share, Learn – Within the Largest Community of Corporate Finance Professionals
Defining Success in the Subscription Economy: Metrics that MatterDave Key, Managing Director, Cloud StrategiesMark Gervase, Cloud Financials Strategist, Intacct
Introductions
MARK GERVASECloud Financials Strategist
Intacct
DAVE KEYManaging Director
Cloud Strategies
• Subscription businesses are different
• Managing by metrics– Revenue management– Churn– Revenue acquisition cost– Bottom line metrics
• Actions to take
• Summary and additional resources
Today’s Agenda
“You can’t manage what you don’t measure”
W. Edwards Deming
Why Metrics?
• Profits & revenues are deferred
• Faster growth = lower profits
• Future recurring revenues are forecast from current customers in addition to new customer sales
Subscription Business Differences
High growth/Short-term losses
0% 20% 40% 60% 80% 100% 120% 140% 160% 180% 200%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
Growth vs. Profit for Public SaaS Com-panies
Annual Revenue Growth
Net
Incom
e
Zendesk
Marketo
(Size of Bubble = Price/Revenue Ratio)
Workday
Success Must Be Measured Differently
• Assess the metrics
• Analyze trends
• Benchmark against peers
Optimize the business
Steps to Subscription Optimization
• Revenue
• Churn
• Cost of Subscription Services
• Revenue Acquisition Costs
• “Bottom Line” Metrics
Key Focus Areas
Thank you for your interest in this presentation. View the on-demand webinar or download the full
presentation at:www.Proformative.com
Defining Success in the Subscription Economy: Metrics that Matter
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