cust.co / Glossary / SaaS Quick Ratio

SaaS Quick Ratio

Ratio of growth (new + expansion ARR) to losses (churn + contraction). >4 is healthy.

Also known as: Quick Ratio (SaaS), Growth Efficiency

Definition

Different from the financial 'quick ratio'. The SaaS quick ratio is (New + Expansion ARR) / (Churn + Contraction ARR) over a period. >4 means you're adding $4 for every $1 you lose - strong. 1-4 = healthy growth. <1 = you're losing more than you're winning. CS teams influence the denominator (churn + contraction); the numerator is mostly sales-led.

Formula

(New ARR + Expansion ARR) / (Churn ARR + Contraction ARR)

Example

$2M new + $500K expansion = $2.5M wins. $300K churn + $200K contraction = $500K losses. Quick ratio = 5.0.

Related terms

Benchmark your SaaS Quick Ratio

See how public B2B SaaS companies disclose this metric, with full historical time series.