Understanding Subscription & SaaS KPIs in RunSmart

RunSmart's Subscription KPIs help you understand the growth, retention, recurring revenue, customer economics, and capital efficiency of your subscription or SaaS business.

These metrics become available after Stripe is connected to your RunSmart project.

RunSmart combines subscription activity from Stripe with financial information from your QuickBooks Online account where necessary, allowing you to evaluate subscription performance alongside the broader financial performance of your business.

Most Subscription KPIs are calculated monthly so you can track how they change over time.

Active Customers measures the total number of paying customer accounts with at least one active subscription at the end of each month.

Each customer is counted once, even if that customer has multiple active subscriptions. Customers whose subscriptions have fully canceled before month-end and customers who are still in a free trial without a paid subscription are not included.

Tracking Active Customers helps you understand whether your recurring revenue base is growing because you're adding more paying customers or because you're generating more revenue from the customers you already have.

Looking at Active Customers alongside metrics such as MRR and ARPA can provide additional context about what is driving your subscription growth.

Active Customers = Unique customers with at least one active paid subscription at the end of the month

For example, if 225 unique customers have at least one active paid subscription at the end of August, Active Customers is 225.

Monthly Recurring Revenue (MRR) represents the recurring subscription revenue generated by your active customers on a normalized monthly basis.

Annual and other subscription billing intervals are converted into monthly amounts so recurring revenue can be compared consistently. One-time charges, setup fees, taxes, and other non-recurring revenue are excluded.

MRR provides a consistent way to measure the size of your recurring revenue base regardless of whether customers are billed monthly, annually, or on another recurring schedule.

Tracking MRR over time makes it easier to see whether your recurring revenue base is growing or shrinking.

MRR = Sum of monthly recurring revenue from all active subscriptions

For annual subscriptions:

Monthly MRR = Annual Subscription Value ÷ 12

For example, if 100 customers each generate $200 in monthly recurring revenue:

100 × $200 = $20,000 MRR

Annual Recurring Revenue (ARR) represents the annualized value of your current recurring subscription revenue.

ARR provides a simple way to express the size of your recurring revenue base on an annual basis. It can make it easier to evaluate longer-term growth and compare the scale of your subscription business across periods.

ARR does not mean the business has already earned or collected that amount. It represents what your current MRR would equal over 12 months if it remained unchanged.

ARR = MRR × 12

For example, if your MRR is $20,000:

$20,000 × 12 = $240,000 ARR

MRR Growth Rate measures how much your monthly recurring revenue increased or decreased compared with the previous month.

MRR Growth Rate helps you understand not only whether recurring revenue is growing, but how quickly it is changing.

Tracking it over time can help reveal whether recurring revenue growth is accelerating, slowing, remaining relatively consistent, or declining.

MRR Growth Rate = ((Current Month MRR − Previous Month MRR) ÷ Previous Month MRR) × 100

For example, if MRR increases from $100,000 in July to $105,000 in August:

($105,000 − $100,000) ÷ $100,000 × 100 = 5%

Your MRR Growth Rate is 5%.

ARR Growth Rate measures how much your annual recurring revenue has increased or decreased compared with the same month one year earlier.

RunSmart calculates this monthly using a rolling year-over-year comparison.

Month-to-month growth can fluctuate significantly. Comparing ARR with the same month one year earlier provides a longer-term view of recurring revenue growth and reduces the effect of normal monthly fluctuations.

RunSmart also uses this ARR Growth Rate when calculating your Rule of 40 Trend.

ARR Growth Rate = ((Current Month ARR − ARR from Same Month Prior Year) ÷ ARR from Same Month Prior Year) × 100

For example, if ARR was $1,000,000 in August 2025 and $1,300,000 in August 2026:

($1,300,000 − $1,000,000) ÷ $1,000,000 × 100 = 30%

Your year-over-year ARR Growth Rate is 30%.

Customer Churn Rate measures the percentage of customers you had at the beginning of the month who canceled during that month.

Customers acquired during the month are not included in the starting customer count used to calculate churn.

Customer Churn Rate helps you understand how effectively your business is retaining existing customers.

Tracking churn over time can help reveal whether customer retention is improving or deteriorating. Comparing customer churn with revenue retention metrics can also help show whether you tend to lose smaller or larger customers.

Customer Churn Rate = Customers Lost During Month ÷ Customers at Beginning of Month × 100

For example, if you started August with 500 customers and 10 canceled:

10 ÷ 500 × 100 = 2%

Your Customer Churn Rate is 2%.

Gross Revenue Retention (GRR) measures how much recurring revenue you retain from your existing customers after accounting for downgrades and cancellations, without giving credit for upgrades or expansion.

GRR cannot exceed 100%.

GRR isolates how much of your existing recurring revenue you're successfully retaining.

Because expansion revenue is excluded, strong upgrades cannot hide revenue being lost through customer churn or downgrades. This makes GRR particularly useful for evaluating the durability of your existing recurring revenue base.

GRR = (Starting MRR − Contraction MRR − Churned MRR) ÷ Starting MRR × 100

New MRR and Expansion MRR are excluded.

For example, if:

Then:

($100,000 − $5,000 − $8,000) ÷ $100,000 × 100 = 87% GRR

Net New MRR measures the net amount of recurring revenue your business gained or lost during the month after accounting for new customers, upgrades, downgrades, and cancellations.

Total MRR tells you the size of your recurring revenue base. Net New MRR helps explain why it changed.

By separating recurring revenue gains and losses into their individual components, you can see whether growth is primarily coming from new customers, expansion within existing customers, or whether it is being offset by contractions and churn.

Net New MRR can be positive, zero, or negative.

Net New MRR = New MRR + Expansion MRR − Contraction MRR − Churned MRR

Where:

For example:

Then:

$20,000 + $5,000 − $4,000 − $9,000 = $12,000 Net New MRR

A positive Net New MRR means you added more recurring revenue than you lost during the month. A negative Net New MRR means recurring revenue losses exceeded new and expansion revenue.

Planned for a future release.

Customer Acquisition Cost measures the average amount spent to acquire one new customer.

CAC helps you understand how efficiently your sales and marketing spending is converting into new customers.

It becomes particularly useful when compared with metrics such as Customer Lifetime Value and CAC Payback Period because acquiring customers is only financially attractive if the value they generate supports the cost of acquiring them.

CAC = (Sales-Related Expenses + Marketing Expenses) ÷ New Customers Acquired During the Same Period

For example, if you spend $10,000 on sales and marketing during January and acquire 10 customers:

$10,000 ÷ 10 = $1,000 CAC

RunSmart will combine sales and marketing expenses with subscription customer acquisition data to calculate this metric.

Planned for a future release.

CAC Payback Period estimates how many months it takes for the gross profit generated by a customer to recover the cost of acquiring that customer.

Two companies can have the same CAC but very different economics depending on how quickly customers generate enough gross profit to recover that acquisition cost.

A shorter payback period means acquisition spending is recovered faster and less capital remains tied up funding customer growth.

CAC Payback Period = CAC ÷ (Average Revenue Per Account × Gross Margin %)

For example, if:

The customer generates:

$100 × 80% = $80 in monthly gross profit

Therefore:

$1,000 ÷ $80 = 12.5 months

The CAC Payback Period is 12.5 months.

Planned for a future release.

The LTV Ratio compares the estimated lifetime value of a customer with the cost of acquiring that customer.

Customer growth is not automatically valuable simply because more customers are being acquired.

LTV helps show whether the estimated economic value generated by customers is sufficient relative to what the business spends acquiring them.

LTV Ratio = Customer Lifetime Value ÷ Customer Acquisition Cost

RunSmart estimates LTV using:

LTV = ARPA × Gross Margin % × (1 ÷ Customer Churn Rate)

For example, if:

Then:

LTV = $100 × 80% × (1 ÷ 0.02) = $4,000

If CAC is $1,200:

$4,000 ÷ $1,200 = 3.3x

The LTV Ratio is 3.3x, meaning the estimated lifetime value is approximately $3.30 for every $1 spent acquiring the customer.

Burn Multiple measures how efficiently your business is converting cash burn into new recurring revenue growth.

Growing ARR is important, but the amount of cash required to generate that growth matters too.

Burn Multiple connects recurring revenue growth with capital consumption so you can evaluate how efficiently the company is using cash to produce additional ARR.

A lower Burn Multiple indicates that less cash is being consumed for each dollar of Net New ARR added, while a higher multiple indicates that growth is more capital intensive.

Burn Multiple = Net Burn ÷ Net New ARR

For example, if the business burns $200,000 during the period and adds $100,000 in Net New ARR:

$200,000 ÷ $100,000 = 2x

The Burn Multiple is 2x, meaning the business burned $2 for every $1 of Net New ARR added.

Net Revenue Retention (NRR) measures how much recurring revenue your existing customers generate after accounting for upgrades, downgrades, and cancellations.

Revenue from new customers is excluded.

NRR helps answer an important question:

Is the recurring revenue generated by our existing customer base growing or shrinking on its own?

An NRR above 100% means expansion from existing customers exceeded the revenue lost through downgrades and churn during the period.

An NRR below 100% means the existing customer base contracted, meaning revenue from new customers is needed to offset that decline.

NRR = (Starting MRR + Expansion MRR − Contraction MRR − Churned MRR) ÷ Starting MRR × 100

For example:

Then:

($100,000 + $15,000 − $5,000 − $8,000) ÷ $100,000 × 100 = 102%

Your NRR is 102%.

Average Revenue Per Account (ARPA) measures the average amount of monthly recurring revenue generated by each active customer account.

ARPA helps you understand the average recurring revenue value of your customer base.

Tracking ARPA over time can reveal the effects of:

If ARPA increases, the average active customer is generating more recurring revenue. If it declines, the average customer is generating less.

ARPA is also used as an input in several other subscription metrics.

ARPA = Total MRR ÷ Total Active Customers

For example, if you have $50,000 in MRR across 200 active customers:

$50,000 ÷ 200 = $250 ARPA

Customer Lifetime Value (LTV) estimates how much gross profit an average customer could generate during the time they remain a customer.

LTV helps you understand the estimated long-term economic value of your average customer.

It combines three important drivers:

This makes LTV useful when evaluating how valuable customers are relative to the cost of acquiring them.

Because LTV is based on observed customer behavior and financial performance, it is an estimate rather than a guarantee of how much an individual customer will ultimately generate.

RunSmart first estimates average customer lifetime:

Estimated Customer Lifetime = 1 ÷ Monthly Customer Churn Rate

Then:

LTV = ARPA × Gross Margin % × Estimated Customer Lifetime

For example, if:

Estimated lifetime is:

1 ÷ 0.02 = 50 months

LTV is:

$100 × 80% × 50 = $4,000

If the applicable Customer Churn Rate is 0%, RunSmart displays LTV as N/A rather than attempting to divide by zero.

Rule of 40 Trend measures the balance between recurring revenue growth and profitability.

RunSmart calculates it monthly using your year-over-year ARR Growth Rate and your trailing 12-month EBITDA Margin.

Fast growth and profitability often require tradeoffs, particularly for subscription businesses investing heavily in expansion.

The Rule of 40 provides a way to evaluate those two dimensions together rather than looking at either one in isolation.

A company can produce a higher Rule of 40 through stronger recurring revenue growth, greater profitability, or a combination of both.

Because it combines growth and operating performance into one measure, the metric may also be useful when discussing company performance with investors, boards, or potential acquirers.

Rule of 40 = YoY ARR Growth Rate % + Trailing 12-Month EBITDA Margin %

Where:

YoY ARR Growth Rate = ((Current Month ARR − ARR from Same Month Prior Year) ÷ ARR from Same Month Prior Year) × 100

and:

Trailing 12-Month EBITDA Margin = (Trailing 12-Month EBITDA ÷ Trailing 12-Month Revenue) × 100

For example, assume that in August:

Then:

30% + 15% = 45% Rule of 40

The following month's calculation updates both the year-over-year ARR comparison and the trailing 12-month EBITDA margin so you can track how the balance between growth and profitability changes over time.