Revenue Per Employee

The total predictable revenue a subscription business earns each month, normalised to exclude one-time charges. MRR is tracked as new MRR, expansion MRR, contraction MRR, and churned MRR to understand the drivers of revenue movement.

A valuation multiple calculated by dividing enterprise value by revenue, used to value businesses where profitability is not yet meaningful — such as early-stage companies, high-growth SaaS businesses, and pre-profit biotech firms. EV/Revenue is less susceptible to manipulation through accounting choices than earnings-based multiples but provides less insight into operating efficiency.

A productivity metric that evaluates the output, revenue, or value generated relative to the number of employees. Headcount efficiency is a key performance indicator for scaling businesses and investors, revealing whether growth in intangible assets such as technology and process automation is translating into leverage across the workforce.

Income received by a company for goods or services that have not yet been delivered or performed, recorded as a liability on the balance sheet. In SaaS and subscription businesses, deferred revenue is a key indicator of future recognised revenue and contract backlog strength.

The percentage of recurring revenue retained from existing customers over a period, including expansion revenue from upsells and cross-sells. NRR above 100% indicates that growth from existing customers outpaces losses from churn, a hallmark of strong product-market fit.

A philosophy of leadership, teamwork, and problem-solving that results in continuous improvement throughout the organisation. Operational excellence focuses on customer needs, employee empowerment, and process optimisation to drive sustainable productivity gains.

The portion of the total addressable market that a company can realistically serve given its current product, business model, and geographic reach. SAM is a more practical measure of near-term opportunity than TAM.

The application of data analysis techniques to human capital data in order to improve workforce planning, productivity, and talent management decisions. Workforce analytics enables organisations to quantify the return on investment in training, recruitment, and employee development — key components of intangible capital formation.

SaaS Intangible Assets: ARR, Churn, and Customer Value

SaaS businesses generate value through intangible assets that compound over time — customer relationships measured by ARR and retention, technology platforms that scale without proportional cost, and data assets that improve with usage. Understanding the intangible asset composition of a SaaS business changes how you value it.

What is Net Revenue Retention (NRR)?

NRR measures the revenue retained from a cohort of customers plus expansion revenue (upsells, cross-sells) minus churn, expressing it as a percentage of starting revenue.

How is the Rule of 40 calculated and when does it apply?

The Rule of 40 states that a healthy SaaS company's revenue growth rate plus profit margin should exceed 40% — it applies primarily to SaaS companies at scale and is used by investors to assess growth-profitability balance.