B2B SaaS KPIs - with William Cordes - KPI Sense

**Ray Rike** (0:00)
Hello, I'm Ray Wright, founder and CEO of RevOp Squared, and host of the Metrics that Measure Up podcast. We talked to a wide variety of B2B SaaS industry thought leaders, executives, and people just like you to discuss what metrics, KPIs, and benchmarks they use to enable better data-driven metrics-informed decisions that accelerate revenue performance and increase enterprise value. Now, on to today's show. Today, we are joined by Will Cordes, founder and CEO of KPI Sense. Welcome to the show, Will.

**William Cordes** (0:35)
Great to be here.

**Ray Rike** (0:37)
So, on today's podcast, we will be covering three primary topics. First, looking at overall SaaS KPI trends and impacts over the past six months, kind of post-COVID hit. Number two, we'll talk about the need for consistency and even possible standardization of SaaS KPIs. And number three, how to determine which SaaS KPIs are most important and appropriate for your SaaS company. Will, before we start today, please introduce yourself in KPI Sense to our listeners.

**William Cordes** (1:07)
Thanks, Ray. Appreciate the high-level intro and great to meet everybody and talk further here. Always good to talk SaaS KPIs and Metrics. My name is Will Cordes, founder and CEO of KPI Sense, and my company, KPI Sense, is a finance as a service business for SaaS companies. Basically, what we do is we provide financial modeling, KPI dashboard, and analytics solutions, and combine tech-enabled automation with vertical market expertise than SaaS to provide a very cost-efficient finance and strategic finance and FP&A type of resource to help support companies as they continue to scale.
Regardless of if you're a founder with no finance team or a large late-stage SaaS business with a full finance team, we work with companies in all sorts of different capacities and are always happy to chat. If you're interested in talking more on the SaaS front, but yeah, that's it for my end. Great.

**Ray Rike** (1:59)
Thanks, Will. Well, with your portfolio of customers, I'm sure you've seen multiple impacts of COVID over the last six months on KPIs and financial performance. In our latest research, we're going to be publishing in about a week.
We looked at first half 2020 KPIs for B2B SaaS, and we found that number one, new ARR growth is down over 50 percent from what they saw in first half 19 Overall, company growth is also down about 50 percent versus the first half plan, and the cost of acquiring each new dollar of ARR as measured by the CAC ratio is increased by over 20 percent. Will, if you look at your portfolio of customers, what KPIs have you seen most impacted over the last six months for your SaaS customers?

**William Cordes** (2:48)
Yeah. Ray, I think you nailed one of them. One of the biggest ones is new bookings, and I think it really depends. There's companies that have faced significant headwinds, and we've even seen some that have realized significant tailwinds, and have actually grown as a result of the COVID crisis. I'd say that the metrics that we see that have been most impacted though, would be day sales outstanding, which really is a measure of how quickly you're turning over your inventory, or kind of outstanding invoices, and kind of SaaS terminology, and kind of monetizing those, and monetizing your AR. New bookings, which would obviously be kind of our ACB, ACB-based bookings for new business. We've seen largely across the board declines, and where a lot of folks have initially planned for the year to be out of the gates, kind of in alignment with your data. And then cash burn, it's something where I think a lot of people have been much more focused on it, given the lack of new bookings, and trying to focus on drawing back expenses and other areas of concern. But again, my biggest point of feedback or thought there is really to monitor day sales outstanding. If you're assuming that you're converting AR every 25 or 30 days, given kind of the circumstances, what we're seeing across our portfolio of companies is a lot of people are, a lot of clients and their end customers are paying a lot slower than they were before this. So we're definitely not bank on receiving and collecting on AR maybe as fast as you were prior to the crisis.

**Ray Rike** (4:07)
Well, if you see day sales outstanding increasing and cash burn becoming a concern, are you seeing a changing in your recommendation of how much cash on hand from, is it 12 months, is it 18 months, is it 24 months? Do you have a benchmark threshold of what you're recommending?

**William Cordes** (4:25)
Yeah. It really depends. So we work with companies that are venture-backed. It may have large cash burns on a monthly basis. We have bootstrap businesses that are profitable. It really depends per your business and how you're thinking about growth. I do definitely would recommend to err towards the side of conservatism, and definitely don't assume that you're going to hit maybe the same growth-oriented forecast that you may have set over this year. So one thing that we think about to really tackle that is really to try and be dynamic and try to focus on where data is and how things are changing, and really kind of look at months performances, months over months versus trying to kind of strap on and really focus on plans that may have been set before all this started. So I definitely think it makes sense. You do have the opportunity to fundraise. It may be worth putting more cash on the sidelines to prepare for more volatility or uncertainty, but it's hard to say. You know, I think it's one of those things where definitely doesn't hurt to be conservative, and obviously if you outperform, all the better.