What metrics should we consider for software companies’ when analysing the company's financials? Am I missing anything out apart from CAC, Churn rate, DBNER metrics?
Gross margins should be in the high ends of 70% to 90% because the nature of software and code is that it is very scalable. The marginal cost of producing an additional piece of software is close to zero.
Some general metrics:
1) rule of 40 : revenue growth + FCF margin should be more than 40%
Generally:
Gross margins should be in the high ends of 70% to 90% because the nature of software and code is that it is very scalable. The marginal cost of producing an additional piece of software is close to zero.
Some general metrics:
1) rule of 40 : revenue growth + FCF margin should be more than 40%
2)LTV(lifetime value)/ CAC
3) Churn Rate
4) Dollar Based net retention rate
5)Quota/OTE
6)P/S
7)EV/recurring profit
Hope it helps!