SaaS Quick Ratio
A ratio comparing a company's revenue growth (new and expansion MRR) against its revenue losses (churn and contraction MRR).
FORMULA
Quick Ratio = (New MRR + Expansion MRR) / (Churned MRR + Contraction MRR)Why it matters
The SaaS Quick Ratio provides an instant snapshot of a company's ability to grow despite its churn. A ratio of 4.0 means the company is adding four dollars of revenue for every one dollar it loses. High-growth startups aim for a Quick Ratio of 4.0 or higher. If the ratio drops below 2.0, churn is creating a massive drag on the business, and acquiring new customers will eventually fail to outpace the leaky bucket. Investors use the Quick Ratio to quickly diagnose the balance between the acquisition engine and product retention.
2025 BENCHMARK
OpenView 2025 data indicates that top-quartile early-stage SaaS companies maintain a Quick Ratio of 3.8 or better.
COMMON MISTAKES
- Excluding contraction MRR from the denominator.
- Including non-recurring revenue in the growth numerator.
- Failing to measure the ratio on a consistent monthly basis.