So What Club

Software and SaaS

ARR bridge and efficiency of a SaaS company in Chennai

The prompt

A SaaS company based in Chennai, India, sells customer support software to small businesses worldwide and reports in USD. It starts the year with USD 50 million of ARR. During the year it wins USD 15 million of new ARR, existing customers add USD 6 million through upgrades and more users, and it loses USD 4 million to churn and downgrades. Sales and marketing spend to win the new customers was USD 18 million, and gross margin is 80 percent. Its free cash flow margin is 5 percent. Calculate ending ARR, growth, NRR, CAC payback, and the rule of 40.

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: Contribution per ride for a ride-hailing app in EgyptThe lesson: SaaS unit economics: ARR bridge, NRR, CAC payback, and rule of 40
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