SaaS MRR Waterfall, Expansion & SaaS Quick Ratio Calculator

SaaS Valuation & Subscription Finance: The MRR Waterfall & Quick Ratio

The SaaS MRR Waterfall breaks down the exact movements of monthly recurring revenue to isolate growth drivers from customer attrition:

• The SaaS Quick Ratio: Popularized by venture capitalist Mamoon Hamid (Social Capital), the Quick Ratio measures growth velocity per unit of churn):

• <2.0x: Struggling growth; churn is eating up sales efforts.

• 2.0x–3.9x: Healthy growth.

• >4.0x: Top-decile, highly efficient venture-scale compounder.

• The Power of Expansion MRR: In top enterprise software companies, expansion MRR from existing customers often accounts for 40%–60% of all monthly revenue additions.

How to Use This Calculator

Enter your Starting Period MRR () (e.g. 75,000), New Customer Acquisition MRR () (e.g. 9,500), Expansion & Upsell MRR ( from existing accounts) (e.g. 4,200), Reactivation & Resurrected MRR () (e.g. 1,100), Contraction & Tier Downgrade MRR () (e.g. 1,400), and Churned & Cancelled MRR () (e.g. 2,800). Results update instantly as you type — adjust any value to compare scenarios.

The Formula

Bessemer Venture Partners \& SaaS Capital MRR Waterfall equations:

Gross MRR Inflows = New MRR + Expansion MRR + Reactivation MRR

Gross MRR Outflows = Contraction MRR + Churned MRR

Net New MRR Added = Gross MRR Inflows - Gross MRR Outflows

Ending Period MRR = Starting MRR + Net New MRR

Ending ARR Run-Rate = Ending MRR × 12

SaaS Quick Ratio = (New MRR + Expansion MRR + Reactivation MRR) / (Contraction MRR + Churned MRR)

Net Revenue Retention (NRR \%) = ((Starting MRR + Expansion - Contraction - Churn) / (Starting MRR)) × 100\%

Worked Example

For example, evaluating a SaaS company with \75,000.00 starting MRR, adding \9,500.00 new MRR, \4,200.00 expansion MRR, \1,100.00 reactivation MRR (\14,800.00 gross added), while losing \1,400.00 contraction MRR and \2,800.00 churned MRR (\4,200.00 gross lost): Net New MRR is \. Ending MRR is \85,600.00 (\1,027,200.00 ARR Run-Rate). The SaaS Quick Ratio is \ with an NRR of 100.0\%.

Understanding Your Result

Benchmark monthly churn rates for SaaS: Best-in-class below 0.5%, good 0.5–1%, average 1–2%, above 2% requires urgent attention. Annual churn above 24% (2% monthly) means the business replaces its entire customer base every 4–5 years — growth becomes a treadmill. Net Revenue Retention (NRR) above 100% means existing customers expand faster than they churn — the most powerful growth lever available. Top-quartile SaaS companies have NRR above 120%. Monthly churn of 1% compounding annually equals 11.4% annual customer loss.