SaaS Quick Ratio
The SaaS quick ratio compares recurring revenue gained (new plus expansion) with recurring revenue lost (churn plus contraction) in a period. A ratio of 4 means four dollars gained for every dollar lost — the benchmark for efficient growth.
Formula
Worked example
Adding $12,000 of new and expansion MRR in a month while losing $3,000 to churn and downgrades is a quick ratio of 4.0.
The metric, popularised by investor Mamoon Hamid, exposes growth quality: two companies can both add $9k net MRR while one gains $12k and loses $3k (ratio 4) and the other gains $45k and loses $36k (ratio 1.25). The second is running to stand still.
Below 1 the business is shrinking; 1–4 means growth is real but leaky; above 4 is the classic bar for efficient early-stage growth. The ratio says nothing about cost — pair it with CAC to see the full picture.
Compute it: SaaS quick ratio calculator