SaaS Quick Ratio

The SaaS Quick Ratio measures growth efficiency by comparing the recurring revenue you gain in a period against the recurring revenue you lose. It answers a blunt question: for every dollar of MRR added, how much is leaking back out? A high ratio means growth is efficient; a low one means you're refilling a leaky bucket.

How it's calculated

Divide the revenue that came in — new plus expansion — by the revenue that went out: churn plus contraction.

For example, in a month you add $8,000 new MRR and $4,000 expansion. You lose $2,000 to churn and $1,000 to contraction. Quick Ratio = ($8,000 + $4,000) ÷ ($2,000 + $1,000) = 12,000 ÷ 3,000 = 4.0.

How to read it

• 4.0 or higher — the widely cited benchmark for efficient, healthy growth; roughly $4 gained for every $1 lost.
• Between 1 and 4 — you're still growing, but working harder than you should to stay ahead of losses.
• Below 1 — losses exceed gains and recurring revenue is contracting.

The 4.0 threshold is popularized by Bessemer Venture Partners as a marker of best-in-class SaaS.

Why it matters

The Quick Ratio distills the whole MRR movement picture into one efficiency number. Two companies can show identical net new MRR while one is growing cleanly and the other is masking heavy churn under aggressive new sales — the ratio exposes the difference. It pairs naturally with net revenue retention, which isolates how the existing base behaves on its own.