KPIs that SaaS CFOs track - with David Appel - Sage Intacct

**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.
Welcome to today's episode of the Metrics It Measure Up podcast. Today, we are joined by David Appel, Head of Subscription and SAS at Sage Intacct. We are extremely fortunate to have David join us, as he brings a wide range of insights and expertise across his operating roles at financial SAS leaders, including NetSuite and Sage Intacct. Today, we will be covering three main areas. What are the largest obstacles that SAS finance leaders are facing in planning for 2021? What are the metrics that matter and that SAS CFOs are tracking today? In best practices at Sage Intacct, customers have deployed to make better strategic, data-driven metrics-informed decisions. David, welcome to the Metrics that Measure Up podcast, and please take a moment to introduce yourselves to our audience.

**David Appel** (1:29)
Well, I'm great to be here. Thank you for having me, Ray. And with that flowery background, I appreciate what that means for all of you, is I can simply tell you all the things not to do, because I've sure made my share of mistake. Between Oracle, IBM Global Services, NetSuite and Sage Intacct, myself and my organizations have been part of over 1,500 financials and ERP implementations, and you sure learn a lot. We're going through that, and so many people paid it forward to me in my career. It's my pleasure to kind of take what I've learned and hopefully have it help all of you in any which way I can. Thanks for having me, Ray.

**Ray Rike** (2:09)
When I first met you and I looked at your background, I saw what a deep and broad area of expertise you have in this kind of subscription-based business model. But 2020 has changed a lot of things, especially the last six months since the pandemic hit. David, have you seen any new financial and metric trends emerge over the last six months that's going to impact how CFOs and COs plan for 2021?

**David Appel** (2:35)
Well, I think what this has done, and many of you probably experienced this, it's really refined and focused our thinking. People have always been concerned about cash flow, always been concerned about churn, always been concerned about what is the why of your company, is everybody rowing the boat the same way, and with how tight things have gotten. You can't afford a lot of political flim-flam, and infighting. You have to be really focused on what it is you're going to do, and how you're going to go about doing it, and having everybody, again, go after that same thing and set aside personal differences and really have the metrics you go. This forces all of us and all of you as finance leaders on, how do you produce the metrics that are going to come out of that? Ray is going to get into it. Back to growth and cash flow expectations changing over time. Over here is what people expected growth to be, 39% and then down to 20%.
And free cash flow margin for was, people still anticipated 12%, still managing at 12%. But underneath that, I should say minus 12%, to be clear. But underneath that is how you're going about doing that.

**Ray Rike** (3:56)
In fact, it's interesting, David, we surveyed about 2,000 B2B SaaS companies in first half. And we saw very similar results where ARR growth was about 50% lower than what was planned for the first half of the year. KeyBank, which is so well respected and really the father of KPI benchmarking for the SaaS industry has 7%.
Our data showed 9%, but that's just based upon the mix of participants. But one of the things we saw, David, was one of the financial metrics that really took a hit was DSO. Day Sales Outstanding, where you have most SaaS companies kind of looking at that 30 to 42 days. We saw a majority over 50% were seeing DSO had increased to 45 to 60 days. Have you seen a similar phenomenon going on with your client base?

**David Appel** (4:47)
Well, it depends on the market and who they sell to. And so it's ultimately you've got to think about your customer's customer. And so in some, it's spread out if people have been selling, let's just pick on a particularly hard hit market, they all might be living through is hospitality. Our travel expense for Intacct is down significantly. Almost all of our customers is down, so that market is getting hit. And so they're stretching out payment terms. But what I see is a lot of companies, and that's great data that you have there, Ray. That's one of the specialties of RevOps, where it is how you're collecting that data real time and not just one-time surveys in order to produce that for everybody. But back to how COVID is changing everybody is it's refined and people are really focused on what is the cash flow process and how am I going to automate that? Because it's like everything, there's people, process and technology. So how am I incenting the staff to tighten in DSO? How am I automating? How the order is coming in and the invoice is going out?