SaaS Quick Ratio
Compute SaaS Quick Ratio = (new + expansion) / (churn + contraction).
SaaS Quick Ratio: growth efficiency
The Quick Ratio measures the ratio between MRR gains and losses: Quick = (New MRR + Expansion MRR) / (Churned MRR + Downgrade MRR). Coined by Mamoon Hamid (Kleiner Perkins) and popularized by SaaSOptics. Reading: > 4 excellent (efficient compounding growth), 1–4 healthy growth, < 1 base shrinking. Example: New $50k + Expansion $20k = $70k of gains; Churn $10k + Downgrade $5k = $15k of losses → Quick = 4.67 (excellent). Unlike Net New MRR, the Quick Ratio is independent of magnitude — it works for a $100k or $10M MRR company.
Context and benchmarks
Used in SaaS health analysis and unit economics diagnostics, complementing NDR and CAC Payback. A Quick Ratio > 4 with positive Net New MRR indicates a leak-proof bucket — the textbook scenario. Common in board reports and Series A/B due diligence.
FAQ
Quick Ratio or NDR? Quick Ratio includes new logos (New MRR); NDR measures only the existing cohort. Together they paint a complete retention picture.
Is a very high Quick Ratio always good? Not necessarily. A Quick Ratio of 20 with absolute low values may just mean a still-tiny base. Combine with Net New MRR in absolute terms.
What's the difference between Churn and Downgrade? Churn = full cancellation (customer leaves); Downgrade = customer stays but on a cheaper plan. Both count as loss in the denominator.
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