So What Club

Cybersecurity

ARR bridge of a cloud security vendor in Bengaluru

The prompt

A cloud security software company in Bengaluru sells worldwide and reports in USD. It starts the year with USD 40 million of ARR (annual recurring revenue). It wins USD 12 million of new ARR, existing customers add USD 8 million by protecting more cloud accounts and buying new modules, and it loses USD 2 million to churn and downgrades. It spent USD 14.4 million on sales and marketing to win the new customers, and its gross margin is 80 percent. Calculate ending ARR, growth, net and gross revenue retention, and CAC payback. (Figures are illustrative.)

Before you reveal anything, plan your own structure and first move on paper. Then reveal one part at a time and compare.

Clarifying questions, with the interviewer's answers

Next case

Read the next worked case the same way: plan your own answer first, then reveal one part at a time.

Next case: What one consultant earns for the firm, and what 10 points of utilization costThe lesson: Cybersecurity economics: breach risk, SaaS and services
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