What are the most important KPIs for a SaaS business and why?
A core FP&A interview question — asked in analyst and associate interviews across IB, PE, and the Big 4.
THE SHORT ANSWER
Key KPIs include: Monthly Recurring Revenue (MRR) and its growth rate, as they show core revenue health; Net Revenue Retention (NRR) above 100% indicates expansion offsets churn; Customer Acquisition Cost (CAC) and LTV:CAC ratio (target >3x) for unit economics; Monthly Churn Rate (especially logo churn for enterprise, revenue churn for SMB); and Cash Burn Rate to monitor runway. These KPIs link directly to business model sustainability and growth, enabling early detection of issues like slowing growth or deteriorating unit economics.
WHAT INTERVIEWERS LISTEN FOR
- ✓MRR/ARR growth
- ✓Net Revenue Retention (NRR)
- ✓CAC and LTV:CAC ratio
- ✓Churn rate (logo and revenue)
- ✓Cash burn rate
COMMON MISTAKES
- ✗Focusing only on top-line revenue
- ✗Ignoring unit economics
- ✗Confusing MRR with total revenue
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