Metrics & Performance
Quick Ratio
A SaaS growth efficiency metric comparing new and expansion revenue against churned and contracted revenue — above 4 is considered excellent for early-stage companies.
SaaS Quick Ratio (not to be confused with the accounting liquidity ratio): (New MRR + Expansion MRR) / (Churned MRR + Contraction MRR)
A Quick Ratio above 4 means for every $1 lost to churn, the company adds $4 in new and expansion revenue. Mamoon Hamid at Kleiner Perkins popularized this metric as one of the best signals of early-stage SaaS health.
A Quick Ratio above 4 = excellent. 2-4 = good. Below 2 = concerning, especially if growth is slowing.
In Practice
A company adds $200K in new MRR and $80K in expansion MRR but loses $60K to churn and $20K to downgrades. Quick Ratio = ($200K + $80K) / ($60K + $20K) = $280K / $80K = 3.5 — solid but not exceptional.
Why It Matters
Quick Ratio captures both sides of the growth equation simultaneously. A company can grow fast while also having severe churn — Quick Ratio exposes this. It's particularly useful for early-stage companies where absolute numbers are small but trajectory matters enormously.