Revenue Recognition in B2B SaaS and Native-AI has never been harder - with Dan Miller, CFO RightRev

**Ray Rike** (0:00)
Hello, I'm Ray Wright, Founder and CEO of BenchMarket, and your host of the Metrics It Measure Up podcast. We talked to a wide variety of the top B2B SaaS and Cloud thought leaders, CEOs, executives, investors, and people just like you to discuss the metrics and benchmarks they use to make metrics informed and benchmark validated decisions. Now, on to today's show. Welcome to today's episode of the Metrics It Measure Up Podcast. Today, I am joined by Dan Miller, the Chief Financial Officer at RightRev. We'll be covering three main topic areas with Dan today. First, how variable pricing models are impacting revenue recognition. Second, how the evolution of outcome-based pricing, an AI native company favorite, will impact revenue recognition. And then third, we're gonna talk about how AI is and will impact the Office of Finance. So, Dan, would you mind taking a moment to give a brief overview of your journey to becoming my guest here on the Metrics at Measure Up podcast?

**Dan Miller** (1:17)
Sure, Ray. Thanks for having me. I love what you do. It's awesome for the community and always interesting topics and thought leadership. So, like you, I started off in Ohio and then moved out to the Bay Area. So, I was in San Francisco for 28 years, started off at Deloitte and Genentech, and then found a little company called Extreme Networks where I was the VP Controller. Took that while I was employee 60 We went up to several thousand employees and 500 million in revenue, big IPO and everything else. Then eventually, found myself as CFO of a company called NextHint, which is about 200 million in revenue, software and services for the utility and electric industry.
There I was, happy as a clam, business growing very quickly. We needed an ERP system for part of our business. Got invited to go as part of a NetSuite sales process to a Golden State Warrior game. At the end of that, Jim McKeever, the CEO at the time said, hey, we want you to come over to NetSuite and run our largest vertical and be Vice President of Finance. It was a great job because I spent about a third of my time on Digital Transformation for NetSuite, a whole bunch of projects there, and then two-thirds of my time outward-facing, acquiring, working through and signing new customers as well as retaining them, and then a whole bunch of thought leadership as part of the NetSuite stuff. Left there after three years, CFO of Fastly, so we'll come back to that in a little bit, but kind of an early startup that was using usage-based pricing, so we'll come back to that. And then took a little time off, moved from the Bay Area to Charleston, and then in 2021 met Jogin Reddy, the founder of RightRev, worked for them in a part-time basis, advising Jogin and the company, and then recently joined as full-time CFO of RightRev. And the reason I did that is because, as we're going to talk about, there's just so much pain in the back office for anything around revenue, we all know, order to cash and all of the new business models. And Jogin had built a previous company, the product RevPro, and was doing it again, and it was super exciting. Building it on a snowflake stack, partnering very closely from day one with Salesforce and that whole order to cash process. And so it's an incredible team, an incredible company, and I'm glad to be here today.

**Ray Rike** (3:47)
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All right, Dan, what an amazing track record. NetSuite, Fastly, and now RightRev. Let's start because you and I, as we were preparing for today's episode, talked a little bit about usage-based pricing and your unique experience there at Fastly. But we do a lot of benchmarking. One of the things we just did was a state of B2B SaaS pricing. And we know that we're evolving into a blend of committed ARR subscriptions plus variable ARR, whether that's usage-based, outcome-based, tokens, credits, etc. So tell me a little bit about revenue recognition was also already difficult enough just with traditional subscription. How is this introduction of variable pricing impacting recognizing revenue challenges?

**Dan Miller** (5:15)
Yeah, one thing that you didn't mention, but I'm sure very familiar with is the impact of marketplaces, right? The cloud marketplaces, Azure, GCP, AWS, etc. And how those work and how that dynamic impacts the overall offering for a company in the economics, particularly as you just mentioned, which is a really unfortunate but great use case, which is credits and how those flow through, when they flow through and how that affects revenue recognition. And the thing that we talk about, of course, is there's the historical aspect and the pain associated with that. And then there's in some ways, let's face it, we're CFOs. It's the forecasting element. How do you figure that out? And there's one thing I'm around and I think just to split the baby for a second, there's forecasting usage, which you can do, right? You got AI, you can figure out seasonality and you can figure out, oh, is there an event? Is there an election or something? We did this a lot at Fastly where, okay, there's a Super Bowl, there's something you can kind of figure that out. Take a look at the trend of that over time. But then when you have these complex offerings, to your point, right? Where you got services bundled in with maybe some subscription, flat subscription as well as usage.