Calqulate SaaS-klubi April 28, 2020

Calqulate Common pain points of SaaS businesses • Subscription management and billing • Cash runway • Revenue recognition • Customer data • Incomplete SaaS metrics • Customer and sales channel profitability • Due diligence readiness

Calqulate Growth Mantra “If you can’t measure it, you can’t improve it” Peter Drucker “If you can’t measure it, you can’t make it grow” Niko Laine

Calqulate Customer and Finance data ecosystem

Calqulate Why SaaS businesses should be finance- led and data-driven? • Know your maximum growth rate potential • Know your KPIs and act early before things get too hot • Cash runway forecasting and sales forecasting is critical in turbulent times -> scenario analysis • Bliztscaling is history. Emphasis on revenue and profitability • Extend sales funnel into full customer lifecycle and know when to invest into CAC – Marketing and sales expenditure -> LTV, revenue, cashflow • Continuous distribution channel and sales channel testing

Calqulate Subscription management • Use a subscription management system – Stripe – Chargebee – Recurly etc • Billing from an accounting system will not provide enough data for SaaS metrics • Avoid manual work • Scale and automate finance operations, reduce finance staff • Subscription analytics tools: Baremetrics, Chargebee, Chartmogul, Calqulate

Calqulate SaaS cashflow forecasting

Calqulate How to extend cash runway? • Update cashflow forecasts on a weekly basis • Raise more to cover additional 6-12 months of runway • Automate subscription payment forecast • From monthly payments to annual payments to cover CAC • Longer customer contracts. Avoid churn! • Convert part of fixed salaries to commission-based and equity • Customer profitability is key • LTV to CAC ratio, is this a good time to grow? • Automate sales and marketing -> marketing funnel

Calqulate The most important SaaS metrics • Early Stage: – Number of customers, MRR, MRR growth • Growth Stage: – Customer Acquisition Cost (CAC), churn, LTV, LTV to CAC – Retained MRR, cohort analysis • Mature – Customer profitability, sales channel profitability

Calqulate MRR forecast

Calqulate SaaS metrics calculation • Churn %: – Churned MRR / previous month MRR – For example 300 EUR / 30,000 EUR = 1% churn • Lifetime Value (LTV) – Average revenue / churn * sales margin 80% – For example 500 EUR / 0,01 * 80% = 40,000 EUR LTV • LTV to CAC ratio – For example 40,000 EUR LTV / 5,000 EUR CAC = 8 – LTV to CAC over 3 is preferable

Calqulate A good time to invest in customer acquisition? - Monthly subscriptions of 500 EUR/month - Sales margin 80% - Customer Acquisition Costs 5,000 EUR/customer - Identify various customer groups/cohorts to maximize profitability 0,5% 2 % 5% Lifetime months 200 50 20 LTV 80,000 EUR 20,000 EUR 8,000 EUR LTV to CAC 16 4 1,6 CAC payback In months 12,5 12,5 12,5

Calqulate CAC payback time Healthy payback time is less than 12 months

Calqulate Churn example MRR 0,5% / 2 % / 5% 5 new monthly subscriptions of 500 EUR/month MRR Forecast '- 35 000 70 000 105 000 140 000 Month 1 Month 3 Month 5 Month 7 Month 9 Month 11 Month 13 Month 15 Month 17 Month 19 Month 21 Month 23 Month 25 Month 27 Month 29 Month 31 Month 33 Month 35 Month 37 Month 39 Month 41 Month 43 Month 45 Month 47 Month 49 Month 51 Month 53 Month 55 Month 57 Month 59 Churn 0.5% Churn 2% Churn 5%

Calqulate Churn example - Retained MRR (cohort) Use churn calculations for revenue forecasting for each cohort Retained MRR 0 250 500 750 1000 Month 1 Month 7 Month 13 Month 19 Month 25 Month 31 Month 37 Month 43 Month 49 Month 55 Churn 0,5% Churn 2% Churn 5%

Calqulate What’s included in CAC? • Total CAC divided by number of new customers • Staff expenses – sales and marketing employees (100%) – CEO, COO (partially) – All co-founders (partially) • All sales and marketing expenditure – Content creation – Digital marketing – Events and conferences – Marketing and CRM software

Calqulate Revenue recognition example • Contract length 12 months • Contract value 1,000 EUR/month, billed and paid annually • Payment 12,000 EUR on month 1 • Revenue recognized in the Profit&Loss 1,000 EUR / month • Advance payment in the Balance Sheet reduced by 1,000 EUR/month Month 1 Month 2 Month 3 Month 4 Month 5 Month 11 Month 12 Cash payment 12,000.00 Revenue in P&L 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 Deferred Revenue in BS 11,000.00 10,000.00 9,000.00 8,000.00 7,000.00 1,000.00 -

Calqulate Customer profitability

Calqulate Due diligence • Be always ready for due diligence • Avoid stress with fundraising • Use a shared online folder (Dropbox, Onedrive, Google drive etc) • Upload the most important legal documents – Employment contracts – Cap table – Previous investment round documents – Incorporation documents

Calqulate The Calqulate Team Osama Abdelmoghni, CTO Tech consultant, data analyst, machine learning, startup advisor +33 640 23 72 01 [email protected] Niko Laine, CEO CFO, Funds industry, SaaS & Marketplace, management accounting and project industry +358 50 341 4552 +1 415 264 3497 [email protected]

Calqulate Calqulate Offices Helsinki Maria 01 Startup Campus Lapinlahdenkatu 16 00180 Helsinki, Finland +358 50 341 4552 [email protected] San Francisco 196 Liberty Street 94110 San Francisco, USA +1 415 264 3497 [email protected]