Glossary
Definitions for SaaS metrics, paid ads, and finance terms - with practical formulas, examples, and common mistakes.
Tip: use Search for calculators and guides, or browse terms below.
How to use the glossary
- Read the definition first, then check the formula (if applicable).
- Use the example to validate units and denominators.
- Scan common mistakes before you set targets or report results.
- Use related calculators to sanity-check break-even points and constraints.
- Use related guides for decision-making context (not just definitions).
- Keep your team's definitions consistent so trends remain comparable.
SaaS metrics
Account Expansion Rate
Account expansion rate measures how many existing accounts expand (upgrade, add seats) over a period.
Updated 2026-01-28
Activation Funnel
An activation funnel breaks down the steps from signup to the first meaningful outcome (for example connect data -> first report -> invite teammate).
Updated 2026-01-24
Activation Rate
Activation rate measures what % of new users reach a meaningful 'aha' moment after signup (an early predictor of retention).
Updated 2026-01-23
ACV (Annual Contract Value)
ACV is the annualized value of a contract. Teams use ACV to compare deal size across different contract lengths.
Updated 2026-01-23
Annual Prepay
Annual prepay is when customers pay upfront for a year of service. It improves cash flow but changes billing and deferred revenue dynamics.
Updated 2026-01-24
ARPA (Average Revenue Per Account)
ARPA (SaaS) measures average revenue per paying account/customer in a period. In B2B SaaS, ARPA often matches pricing better than ARPU.
Updated 2026-02-22
ARPA vs ARPU
ARPU is revenue per active user; ARPA is revenue per paying account/customer. Choose the denominator that matches how you bill.
Updated 2026-01-23
ARPU (Average Revenue Per User)
ARPU is revenue divided by average active users for a period. Learn formula, example, and common mistakes.
Updated 2026-01-23
ARR (Annual Recurring Revenue)
ARR is an annualized recurring revenue run-rate (typically MRR * 12). Definition, formula, example, and common mistakes.
Updated 2026-01-23
ARR Multiple (valuation)
ARR multiple is a valuation shorthand: enterprise value divided by ARR. It is a heuristic that varies by growth, margin, and retention.
Updated 2026-01-23
ARR vs Bookings
ARR vs bookings: bookings are contracted value closed in a period; ARR is a recurring run-rate snapshot (MRR * 12). They answer different questions.
Updated 2026-02-22
ARR Waterfall
An ARR waterfall reconciles starting ARR to ending ARR using new, expansion, contraction, and churned ARR movements.
Updated 2026-01-23
ARRR Funnel (Pirate Metrics)
ARRR is a product growth framework: Acquisition, Activation, Retention, Revenue, Referral. It helps pick the right KPI for each stage.
Updated 2026-01-23
Average Sales Price (ASP)
Average sales price is the average booked value per closed-won deal over a period (often ACV for SaaS).
Updated 2026-01-24
Break-even (SaaS context)
Break-even means total contribution covers fixed costs (profit is zero). In SaaS, it depends heavily on gross margin and acquisition spend.
Updated 2026-01-23
Burn Multiple
Burn multiple is a growth efficiency metric: how much net cash you burn to generate $1 of net new ARR.
Updated 2026-01-23
CAC (Customer Acquisition Cost)
CAC is acquisition spend divided by new paying customers. Learn the formula, what to include, and how to segment CAC.
Updated 2026-01-23
CAC Payback Period
CAC payback period estimates how long it takes to recover customer acquisition cost (CAC) using the gross profit generated each month by a customer/account.
Updated 2026-01-23
Churn Prediction
Churn prediction estimates which customers are at risk of churn using behavior, adoption, and account signals. The goal is intervention that improves retention.
Updated 2026-01-24
Churn Rate
Churn rate measures the fraction of customers (logo churn) or recurring revenue (revenue churn) lost over a period. It is one of the most important drivers of LTV and payback.
Updated 2026-01-23
Churn Reasons
Churn reasons are categorized explanations for why customers cancel or downgrade (for example missing features, price, onboarding failure).
Updated 2026-01-24
Churned MRR
Churned MRR is recurring revenue lost from customers who cancel in a period. It is a key component of net new MRR and revenue retention.
Updated 2026-01-23
CMGR (Compound Monthly Growth Rate)
CMGR is the compounded monthly growth rate between a starting value and an ending value over N months.
Updated 2026-01-23
Cohort Age
Cohort age is how long a cohort has existed since start. Older cohorts often behave differently than new cohorts due to mix and lifecycle effects.
Updated 2026-01-24
Cohort Analysis
Cohort analysis groups customers by a shared start point (e.g., signup month) and tracks outcomes (retention, revenue) over time.
Updated 2026-01-23
Cohort Maturity
Cohort maturity describes whether a cohort has reached stable, longer-term retention behavior (often after early churn decays).
Updated 2026-01-24
Cohort Month
Cohort month is the month index of a cohort relative to its start (month 0, month 1, month 2...). It is used to align retention curves.
Updated 2026-01-24
Cohort-based LTV
Cohort-based LTV estimates lifetime value using observed retention and gross profit over time for a cohort, rather than a simple churn formula.
Updated 2026-01-23
Contraction MRR
Contraction MRR is the reduction in recurring revenue from existing customers due to downgrades or reduced usage/seats (not full churn).
Updated 2026-01-23
Conversion Rate
Conversion rate measures the % of users who complete a goal action (signup, purchase, activation) out of those exposed to the step.
Updated 2026-01-23
CSM to Account Ratio
CSM to account ratio measures how many customer accounts each customer success manager supports.
Updated 2026-01-28
Customer Advocacy
Customer advocacy reflects how willing customers are to recommend, review, or co-market with you.
Updated 2026-01-28
Customer Health Score
A customer health score is a composite metric that estimates churn risk using product usage, support signals, and account context.
Updated 2026-01-24
Customer Lifetime
Customer lifetime is the expected duration a customer stays subscribed. It's often approximated from churn rate (with consistent time units).
Updated 2026-01-23
Customer Success
Customer success is the function focused on helping customers achieve outcomes so retention and expansion improve over time.
Updated 2026-01-24
Customer Success Cost
Customer success cost is the cost of onboarding, support, and success motions required to retain and expand customers. It should be included in unit economics when material.
Updated 2026-01-24
DAU (Daily Active Users)
DAU counts unique active users on a given day. The definition of 'active' must be consistent (session vs key event).
Updated 2026-01-23
Deal Age
Deal age is how long a deal has been in pipeline since creation. It helps identify stalls and slippage risk.
Updated 2026-01-28
Deal Slippage
Deal slippage is when opportunities expected to close in a period move out to a later period. It reduces forecast reliability and complicates capacity planning.
Updated 2026-01-24
Downgrade Rate
Downgrade rate measures how often customers reduce plan level, seats, or usage, which reduces recurring revenue even if logos remain.
Updated 2026-01-24
Expansion Bookings
Expansion bookings are new contracted revenue from existing customers (upsells, seat expansion, upgrades) in a period.
Updated 2026-01-28
Expansion MRR
Expansion MRR is added recurring revenue from existing customers (upsells, upgrades, seat growth, add-ons). It drives high NRR.
Updated 2026-01-23
Expansion Playbook
An expansion playbook is a repeatable process to drive upgrades, add-ons, and renewals based on usage signals and customer goals.
Updated 2026-01-24
Expansion Rate
Expansion rate measures how much additional recurring revenue comes from existing customers (upgrades, add-ons, more seats) over a period.
Updated 2026-01-24
Feature Activation
Feature activation is when a customer successfully uses a key feature for the first time. It is often a leading indicator for adoption and retention.
Updated 2026-01-24
Feature Adoption Rate
Feature adoption rate measures what % of active users used a specific feature in a time window. It helps validate that users are discovering and using value-driving capabilities.
Updated 2026-01-23
Forecast Accuracy
Forecast accuracy measures how close your forecast was to the actual outcome (bookings/revenue) for a period.
Updated 2026-01-24
Freemium
Freemium is a pricing model where a free tier drives acquisition and a subset of users converts to paid via upgrades or usage limits.
Updated 2026-01-24
Fully-loaded CAC
Fully-loaded CAC includes more of your acquisition costs (often sales & marketing salaries and tools) to make CAC planning-grade for unit economics.
Updated 2026-01-24
Funnel
A funnel models a sequence of steps users take (visit -> signup -> activate -> pay) and the conversion rates between steps.
Updated 2026-01-23
Gross Adds
Gross adds (meaning the total new customers or new MRR/ARR added in a period before churn) is a top-line growth input.
Updated 2026-02-22
Gross Retention
Gross retention is the same idea as GRR: revenue retained from a cohort excluding expansion (only churn and contraction).
Updated 2026-01-23
Gross Revenue Churn
Gross revenue churn is the share of starting MRR lost to downgrades (contraction) and cancellations (churn) over a period. It excludes expansion by definition.
Updated 2026-01-23
GRR (Gross Revenue Retention)
GRR measures how much of a cohort's starting revenue remains after churn and downgrades, excluding expansion.
Updated 2026-01-23
Hybrid Growth (PLG + Sales)
Hybrid growth combines product-led acquisition with sales-assisted conversion for larger accounts or more complex use cases.
Updated 2026-01-24
Lead Response Time
Lead response time measures how long it takes to contact a new inbound lead after it is created.
Updated 2026-01-28
Logo Churn
Logo churn is customer churn measured in count (accounts lost), not dollars. It can be high even when NRR is strong.
Updated 2026-01-23
Logo Retention Rate
Logo retention rate is the share of customers retained over a period, excluding expansion or contraction in revenue.
Updated 2026-01-28
LTV (Lifetime Value)
LTV estimates the value a customer generates over their lifetime. For unit economics, gross profit LTV is usually more useful than revenue LTV.
Updated 2026-01-23
LTV:CAC Ratio
LTV:CAC compares lifetime value to acquisition cost. It's a unit economics sanity check, but can mislead if definitions mismatch.
Updated 2026-01-23
MAU (Monthly Active Users)
MAU counts unique active users over a month (or rolling 30 days). It measures reach and is often paired with DAU/WAU to measure frequency (stickiness).
Updated 2026-01-23
Months to recover CAC
Months to recover CAC is another name for CAC payback period: the months of gross profit needed to earn back acquisition cost.
Updated 2026-01-23
MQL (Marketing-Qualified Lead)
An MQL is a lead judged likely to become a customer based on marketing engagement signals (content, forms, intent).
Updated 2026-01-23
MRR (Monthly Recurring Revenue)
MRR is recurring subscription revenue expected in a month. Learn components, how to measure it, and pitfalls.
Updated 2026-01-23
MRR Churn Rate
MRR churn rate measures churned MRR (lost recurring revenue from cancellations) as a percentage of starting MRR for a period.
Updated 2026-01-23
MRR Growth Rate
MRR growth rate measures how MRR changed between two points in time. It can be expressed as period growth, CMGR, or annualized growth.
Updated 2026-01-23
NDR (Net Dollar Retention)
NDR is another name for NRR in dollar terms. It measures how existing revenue changes including expansion.
Updated 2026-01-23
Net New ARR
Net new ARR is the net change in ARR over a period after adding new and expansion ARR and subtracting contraction and churn.
Updated 2026-01-23
Net New MRR
Net new MRR is the change in MRR in a period after expansions, contractions, and churn. It combines growth and retention movements.
Updated 2026-01-23
Net Retention
Net retention is the same idea as NRR: revenue retained from a cohort including expansion and contraction.
Updated 2026-01-23
New MRR
New MRR is recurring revenue added from brand-new customers in a period (excluding expansions from existing customers).
Updated 2026-01-23
NRR (Net Revenue Retention)
NRR measures how revenue from an existing cohort changes over time, including expansion and contraction.
Updated 2026-01-23
Onboarding Completion Rate
Onboarding completion rate is the % of new users who finish your onboarding milestones within a defined window.
Updated 2026-01-24
Opportunity Win Rate
Opportunity win rate is the fraction of opportunities that become closed-won. It should be measured with a clear stage definition.
Updated 2026-01-24
OTE (On-target Earnings)
OTE (on-target earnings) is total sales compensation at 100% quota attainment: base pay plus target variable pay.
Updated 2026-01-23
Pipeline Coverage
Pipeline coverage is pipeline value divided by quota for a time window. It's a sanity check that you have enough opportunity value to produce the target outcome given your win rate.
Updated 2026-01-23
Pipeline Hygiene
Pipeline hygiene is the quality and accuracy of pipeline data, including stage updates, close dates, and qualification criteria.
Updated 2026-01-28
Pipeline Review
A pipeline review is a structured inspection of active deals, stages, and close dates to improve forecast accuracy.
Updated 2026-01-28
Pipeline Velocity
Pipeline velocity estimates how quickly pipeline converts into revenue. It combines deal size, win rate, and sales cycle length.
Updated 2026-01-24
PLG (Product-led Growth)
Product-led growth is a go-to-market approach where the product drives acquisition, activation, retention, and expansion through self-serve value.
Updated 2026-01-24
PQL (Product-Qualified Lead)
A PQL is a lead identified by product usage signals (not only form fills). PQLs often convert better when the product is the primary driver of value.
Updated 2026-01-23
PQL-to-paid Conversion
PQL-to-paid conversion measures what % of product-qualified leads (PQLs) become paying customers. It connects product usage signals to revenue outcomes.
Updated 2026-01-23
Price Increase (SaaS)
A price increase raises ARPA/MRR for an existing customer base. It is high leverage, but it can trigger churn or downgrades if customers perceive reduced value-for-money.
Updated 2026-01-23
Product Adoption
Product adoption measures how deeply and broadly customers use your product (features, frequency, breadth of teams). It is a driver of retention and expansion.
Updated 2026-01-24
Product-market Fit (PMF)
Product-market fit means your product reliably solves a real problem for a defined segment, shown by strong retention and efficient growth.
Updated 2026-01-24
Quota Attainment
Quota attainment is booked revenue divided by quota for a period. It's used to track progress toward targets and to manage pacing.
Updated 2026-01-23
Quota Setting
Quota setting is the process of assigning revenue targets by rep, team, or segment based on capacity, pipeline, and business goals.
Updated 2026-01-23
Quota-carrying Reps
Quota-carrying reps are salespeople with assigned revenue targets. They are the core capacity unit for forecasting.
Updated 2026-01-28
Ramp Time
Ramp time is the time it takes a new rep to reach full productivity or a target quota level.
Updated 2026-01-28
Renewal Forecast
A renewal forecast estimates how much recurring revenue will renew in a future period based on contract terms, churn risk, and expansion expectations.
Updated 2026-01-24
Renewal Playbook
A renewal playbook is a repeatable process for driving on-time renewals and expansion, including health scoring and executive alignment.
Updated 2026-01-28
Renewal Rate
Renewal rate is the % of contracts that renew at the end of term. It is a contract-based lens on retention for annual or multi-year deals.
Updated 2026-01-24
Retention Cohort
A retention cohort groups customers by a shared start point (for example signup month) and tracks how many remain active or paying over time.
Updated 2026-01-24
Retention Rate
Retention rate measures the fraction of customers (or revenue) that remains over a period. It is the complement of churn when measured on the same basis and time window.
Updated 2026-01-23
Revenue Churn
Revenue churn measures how much recurring revenue you lose (MRR dollars) over a period. It differs from logo churn.
Updated 2026-01-23
Rule of 40
Rule of 40 is a SaaS heuristic: growth rate (%) + profit margin (%) should be ~40%+. It balances growth and profitability.
Updated 2026-01-23
SaaS Magic Number
SaaS Magic Number definition: a sales efficiency heuristic that compares net new ARR to prior-period sales & marketing spend (with a lag).
Updated 2026-02-22
SaaS Quick Ratio
SaaS quick ratio measures growth quality by comparing positive MRR movements to negative movements in a period.
Updated 2026-01-23
SAL (Sales-accepted Lead)
A sales-accepted lead (SAL) is a lead that sales agrees is worth working, often a checkpoint between MQL and SQL.
Updated 2026-01-24
Sales Capacity
Sales capacity is the bookings output a sales team can produce in a period given headcount, quota per rep, expected attainment, and ramp.
Updated 2026-01-30
Sales Cycle Duration
Sales cycle length is the average time from first touch to closed-won. It affects cash timing and pipeline planning.
Updated 2026-01-28
Sales Cycle Length
Sales cycle length is the time from first touch or opportunity creation to close. It impacts CAC payback and forecasting.
Updated 2026-01-23
Sales Cycle Variance
Sales cycle variance describes how spread out your time-to-close is (some deals close fast, others stall). High variance makes forecasting harder.
Updated 2026-01-24
Sales Efficiency
Sales efficiency compares net new revenue to sales and marketing spend over a period. It shows how effectively spend converts into growth.
Updated 2026-01-28
Sales Forecast
A sales forecast is an estimate of bookings/revenue you expect to close in a future period based on pipeline, win rates, and timing.
Updated 2026-01-24
Sales Pipeline
Sales pipeline is the set of open opportunities expected to close, usually tracked by stage, amount, and expected close date.
Updated 2026-01-23
Sales Pipeline Coverage
Sales pipeline coverage compares pipeline value to quota or revenue targets to gauge whether enough pipeline exists to hit goals.
Updated 2026-01-28
Sales Quota
Sales quota is a target revenue amount for a rep/team over a time period (monthly/quarterly/annual). Quota is used for planning, compensation, and forecasting.
Updated 2026-01-23
Sales Quota Coverage
Sales quota coverage compares pipeline to quota for a period to estimate whether enough pipeline exists to hit targets.
Updated 2026-01-28
Sales Ramp
Sales ramp is the time and productivity curve it takes for a new sales rep to reach full quota productivity. Ramp affects capacity, forecasting, and hiring plans.
Updated 2026-01-23
Sales Stage Velocity
Sales stage velocity measures how quickly opportunities move through each pipeline stage.
Updated 2026-01-28
Sales-qualified Pipeline
Sales-qualified pipeline is the subset of pipeline that meets agreed qualification criteria, making it more predictive than raw pipeline.
Updated 2026-01-24
Seat-based Pricing
Seat-based pricing charges per user/seat. It is easy to understand and can drive expansion as teams grow, but it can create usage friction if pricing feels punitive.
Updated 2026-01-24
SLG (Sales-led Growth)
Sales-led growth relies on a sales motion (SDR/AE) to acquire customers, often with higher ACV and longer sales cycles than pure PLG.
Updated 2026-01-24
SQL (Sales-Qualified Lead)
An SQL is a lead that sales has validated as qualified for a sales conversation (budget/need/timing or product fit).
Updated 2026-01-23
SQO (Sales-qualified Opportunity)
A sales-qualified opportunity (SQO) is an opportunity that meets qualification criteria and is entered into the active sales pipeline.
Updated 2026-01-24
Stage Conversion Rate
Stage conversion rate is the % of records that move from one stage to the next (for example SQL -> Opportunity, Opportunity -> Won).
Updated 2026-01-24
Stickiness (DAU/MAU, WAU/MAU)
Stickiness measures how frequently users return. The most common versions are DAU/MAU (daily stickiness) and WAU/MAU (weekly stickiness).
Updated 2026-01-23
TCV (Total Contract Value)
TCV is the total signed contract value over the full term (often includes recurring plus one-time items depending on your definition).
Updated 2026-01-23
Time to Close
Time to close is the elapsed time from opportunity creation (or first touch) to closed-won or closed-lost.
Updated 2026-01-24
Time to Value (TTV)
Time to value (TTV) is how long it takes a new customer to reach a meaningful outcome. Shorter TTV tends to improve retention.
Updated 2026-01-24
Trial Length
Trial length is how long a trial user can evaluate your product before needing to convert to paid. It affects conversion and sales cycle dynamics.
Updated 2026-01-24
Trial-to-paid Conversion Rate
Trial-to-paid conversion measures what % of trial users become paying customers within a defined window.
Updated 2026-01-23
Unit Economics
Unit economics evaluate profitability and cash efficiency at the level of a unit (customer/account/order). Common unit metrics are CAC, LTV, and payback.
Updated 2026-01-23
Usage-based Pricing
Usage-based pricing charges customers based on consumption (for example API calls, GB processed). It can align price with value but can increase revenue variability.
Updated 2026-01-24
WAU (Weekly Active Users)
WAU counts unique active users over a 7-day window. It's often a better engagement signal for weekly cadence products than DAU.
Updated 2026-01-23
Win Rate
Win rate is the fraction of opportunities that convert to closed-won. It can be measured by count or by value and varies by stage definition.
Updated 2026-01-23
Win-Loss Analysis
Win-loss analysis reviews why deals were won or lost to improve messaging, qualification, and competitive strategy.
Updated 2026-01-28
Paid ads
A/B Test
An A/B test compares two variants (A and B) to measure whether a change improves an outcome (e.g., conversion rate).
Updated 2026-01-23
Account Structure
Account structure is how you organize campaigns, ad sets, and audiences to balance control with algorithmic learning.
Updated 2026-01-28
Ad Fatigue
Ad fatigue happens when an audience sees the same creative too often and performance declines.
Updated 2026-01-28
Ad Rank
Ad rank is a system used in search auctions to decide ad position. It is influenced by bid and quality signals.
Updated 2026-01-24
Ad Relevance
Ad relevance measures how well your ad matches a user's intent and query/context. Higher relevance tends to improve CTR and efficiency.
Updated 2026-01-24
AOV (Average Order Value)
AOV measures the average revenue per order. It affects your allowable CPA at a given margin.
Updated 2026-01-23
Assisted Conversions
Assisted conversions are conversions where a channel contributed in the path but did not get full last-click credit.
Updated 2026-01-24
Attribution
Attribution is the method used to assign credit for conversions to channels, campaigns, and touchpoints.
Updated 2026-01-23
Attribution Model
An attribution model defines how you assign conversion credit across touchpoints (for example first-click, last-click, or multi-touch).
Updated 2026-01-24
Attribution Window
Attribution window is the time period after an ad interaction during which conversions are credited to that ad.
Updated 2026-01-23
Auction Overlap
Auction overlap measures how often your ads compete in the same auctions as another advertiser. It can explain CPM/CPC pressure and ranking dynamics.
Updated 2026-01-24
Bid Strategy
A bid strategy is the method you use to set bids (manual CPC, target CPA, target ROAS, maximize conversions) based on your goals and constraints.
Updated 2026-01-24
Blended ROAS
Blended ROAS is revenue divided by total ad spend across channels. It reduces attribution noise but hides channel-level performance.
Updated 2026-01-23
Branded Search
Branded search refers to search campaigns targeting your brand terms. It often shows very high ROAS but can overlap with organic demand.
Updated 2026-01-23
Break-even CPM
Break-even CPM is the maximum cost per 1,000 impressions you can pay while still breaking even on variable economics at your CTR, CVR, and contribution margin.
Updated 2026-01-23
Break-even ROAS
Break-even ROAS is the minimum ROAS needed to avoid losing money after variable costs (and optionally fixed costs / target profit).
Updated 2026-01-23
Broad Match
Broad match allows ads to show on searches related to your keyword, not only exact matches. It increases reach but can reduce relevance.
Updated 2026-01-24
Budget Pacing
Budget pacing is how spend is distributed over time (day/week/month). Poor pacing can cause end-of-period spikes or missed opportunities.
Updated 2026-01-24
Budget Reallocation
Budget reallocation shifts spend across campaigns or channels based on marginal performance and capacity.
Updated 2026-01-28
Campaign Naming Convention
A campaign naming convention is a consistent format for naming campaigns and assets so reporting stays readable and scalable.
Updated 2026-01-24
Click ID
A click ID is a unique identifier added to a landing page URL to link a click to an ad interaction (used for attribution and conversion uploads).
Updated 2026-01-24
Click-through Conversion
A click-through conversion is credited to an ad click when the user clicked and converted within the attribution window.
Updated 2026-01-24
Click-to-conversion Funnel
A simplified ad funnel: impressions -> clicks -> conversions. Use CPM/CTR/CVR to diagnose where efficiency is lost.
Updated 2026-01-23
Consent Mode
Consent Mode adapts how measurement tags behave based on user consent choices (for example analytics vs ads storage).
Updated 2026-01-24
Conversion
A conversion is an action you care about (purchase, signup, lead, subscription) that you measure and optimize toward.
Updated 2026-01-23
Conversion API (Server Events)
A conversion API sends events from your server to ad platforms (for example purchases, leads) to improve measurement when browser tracking is limited.
Updated 2026-01-24
Conversion Lag
Conversion lag is the time delay between an ad interaction and the conversion event (purchase, signup, lead).
Updated 2026-01-24
Conversion Lift Test
A conversion lift test compares a control group (not exposed) with a test group (exposed) to estimate true incremental impact beyond attribution.
Updated 2026-01-24
CPA (Cost Per Acquisition)
CPA is ad spend divided by conversions (purchase, signup, lead). It's a tactical metric; CAC usually refers to cost per new paying customer including broader costs.
Updated 2026-01-23
CPC (Cost Per Click)
CPC measures how much you pay for each click on your ads.
Updated 2026-01-23
CPL (Cost Per Lead)
CPL is ad spend divided by leads generated. CPL is a top-of-funnel metric and should be connected to paying-customer outcomes (CAC).
Updated 2026-01-23
CPM (Cost Per Mille)
CPM is the cost per 1,000 impressions. It varies by audience, placement, seasonality, and competition.
Updated 2026-01-23
Creative Angle
A creative angle is the core message or positioning used to persuade a specific audience (for example speed, price, risk reduction, social proof).
Updated 2026-01-24
Creative Fatigue
Creative fatigue happens when performance declines because the audience has seen the same creatives too many times.
Updated 2026-01-23
Creative Iteration
Creative iteration is the process of shipping new variations (hooks, visuals, offers) to avoid fatigue and improve performance over time.
Updated 2026-01-24
Creative Testing
Creative testing is the structured process of comparing ad concepts, hooks, and formats to find what drives clicks and conversions.
Updated 2026-01-28
Cross-domain Tracking
Cross-domain tracking connects user sessions across multiple domains (for example marketing site -> checkout) to preserve attribution and funnels.
Updated 2026-01-24
CTR (Click-Through Rate)
CTR is the fraction of impressions that become clicks.
Updated 2026-01-23
CVR (Conversion Rate)
Conversion rate measures the % of visitors who complete an action. In ads it's often conversions / clicks; on-site it can be conversions / sessions.
Updated 2026-01-23
Data Layer
A data layer is a structured object (often on the page) that exposes events and attributes for analytics and tag managers.
Updated 2026-01-24
Data-driven Attribution
Data-driven attribution assigns credit based on observed conversion paths rather than a fixed rule, but it still relies on tracked data and assumptions.
Updated 2026-01-24
Dayparting
Dayparting schedules when ads can run (hours/days) to focus spend on higher-performing times, but it can bias learning and measurement.
Updated 2026-01-24
Diminishing Returns (ads)
Diminishing returns means each additional dollar of spend produces less incremental revenue than the previous dollar, often due to audience saturation and creative fatigue.
Updated 2026-01-23
Direct Traffic
Direct traffic in analytics typically means the source is unknown (no referrer, no UTM). It often includes bookmarks, apps, and untagged links.
Updated 2026-01-24
Enhanced Conversions
Enhanced conversions use hashed first-party data (for example email) to improve conversion measurement when cookies or identifiers are limited.
Updated 2026-01-24
Event Deduplication
Event deduplication prevents counting the same conversion twice when you send events from multiple sources (browser + server).
Updated 2026-01-24
Exact Match
Exact match shows ads on queries that closely match your keyword intent. It offers strong intent control but limited reach.
Updated 2026-01-24
Expected CTR
Expected CTR is a quality component representing the likelihood your ad will be clicked. Higher expected CTR can reduce cost for the same position.
Updated 2026-01-24
FBCLID (Facebook Click ID)
FBCLID is a click identifier appended by Meta to landing page URLs to help connect on-site sessions and outcomes back to ads.
Updated 2026-01-24
First-click Attribution
First-click attribution assigns 100% of the conversion credit to the first known touchpoint in the path.
Updated 2026-01-24
Frequency
Frequency is the average number of times a person sees your ad in a period. High frequency can cause fatigue.
Updated 2026-01-23
Frequency Cap
A frequency cap limits how often someone can see your ad in a time window (per day or week) to reduce fatigue and wasted impressions.
Updated 2026-01-23
Frequency Saturation
Frequency saturation is the point where additional impressions stop increasing conversions and start wasting spend.
Updated 2026-01-28
GA4 (Google Analytics 4)
GA4 is Google's analytics platform for web and app measurement. In paid ads, it helps with cross-channel reporting but can undercount conversions.
Updated 2026-01-23
GCLID (Google Click ID)
GCLID is a click identifier Google Ads appends to landing page URLs to help attribute sessions and conversions back to ads.
Updated 2026-01-24
Geo Experiment
A geo experiment measures lift by varying spend across regions and comparing outcomes against controls.
Updated 2026-01-23
Geo Holdout
A geo holdout is an incrementality test that turns ads off in selected geographies and compares outcomes versus similar geographies where ads remain on.
Updated 2026-01-24
Holdout Test
A holdout test withholds ads from a control group and compares outcomes to measure incremental lift.
Updated 2026-01-23
Hook Rate
Hook rate is the share of viewers who stay engaged through the first seconds of a video ad (platform definition varies). It is an early creative quality signal.
Updated 2026-01-24
Impression Share
Impression share is the % of times your ads were shown out of total eligible impressions (search).
Updated 2026-01-23
Impression Share Lost (Budget)
Impression share lost (budget) is the share of impressions you missed because your budget was insufficient.
Updated 2026-01-24
Impression Share Lost (Rank)
Impression share lost (rank) is the share of impressions you missed due to insufficient ad rank (bid and quality).
Updated 2026-01-24
Impressions
Impressions count how many times your ads were shown (not unique people).
Updated 2026-01-23
Incremental Conversion Rate
Incremental conversion rate measures the share of conversions that would not have happened without ads.
Updated 2026-01-28
Incremental ROAS (iROAS)
Incremental ROAS estimates how much additional (incremental) revenue you generate per additional dollar of ad spend, rather than attributed revenue per spend.
Updated 2026-01-24
Incrementality
Incrementality estimates the conversions that would not have happened without ads (true lift).
Updated 2026-01-23
Keyword Cannibalization
Keyword cannibalization happens when multiple keywords or campaigns compete for the same queries, increasing cost or distorting reporting.
Updated 2026-01-24
Landing Page
A landing page is the page users arrive on after clicking an ad. Landing page quality strongly affects CVR and CPA.
Updated 2026-01-23
Landing Page Experience
Landing page experience reflects how helpful and relevant your landing page is for the user, impacting conversion and quality in many ad platforms.
Updated 2026-01-24
Landing Page Speed
Landing page speed is how quickly a landing page becomes usable and visible after a click. It directly affects conversion rate.
Updated 2026-01-28
Last Non-direct Click
Last non-direct click attribution ignores direct traffic and assigns credit to the last known non-direct channel before conversion.
Updated 2026-01-24
Last-click Attribution
Last-click attribution assigns 100% of conversion credit to the final touchpoint before conversion.
Updated 2026-01-23
Lead-to-customer Rate
Lead-to-customer rate is the % of leads that become paying customers over a defined time window. It is a key bridge from CPL to CAC.
Updated 2026-01-23
Learning Phase
Learning phase is the period when an ad platform is exploring and adjusting delivery to stabilize performance. Big changes can reset learning.
Updated 2026-01-24
Lift Study
A lift study measures incremental impact by comparing exposed vs control groups (or regions) under a test design, often run by ad platforms.
Updated 2026-01-24
Linear Attribution
Linear attribution spreads conversion credit evenly across all recorded touchpoints in a conversion path.
Updated 2026-01-24
Marginal ROAS
Marginal ROAS is the incremental revenue generated by the next unit of ad spend. It is the metric you want for scaling decisions under diminishing returns.
Updated 2026-01-23
Marketing Mix Modeling (MMM)
Marketing mix modeling uses aggregated time series data to estimate how marketing channels contribute to outcomes (for example revenue) when user-level tracking is limited.
Updated 2026-01-24
Match Type
Match type controls how closely a search query must match your keyword in paid search. It affects reach, intent, and cost.
Updated 2026-01-24
Max CPC
Max CPC is the maximum cost per click you can pay while still meeting your unit economics target (break-even or with a profit buffer).
Updated 2026-01-23
MER (Marketing Efficiency Ratio)
MER (also called blended ROAS) is total revenue divided by total marketing spend over the same period. It's useful for top-down health checks.
Updated 2026-01-23
Minimum Detectable Effect (MDE)
MDE is the smallest effect size you want your experiment to reliably detect. Smaller MDE requires much larger samples.
Updated 2026-01-23
MSCLKID (Microsoft Click ID)
MSCLKID is the click identifier appended by Microsoft Ads (Bing) to attribute sessions and conversions back to ads.
Updated 2026-01-24
Multi-touch Attribution (MTA)
Multi-touch attribution spreads conversion credit across multiple touchpoints (first, last, and middle touches).
Updated 2026-01-23
Negative Keywords
Negative keywords prevent your ads from showing for specific search terms, improving relevance and efficiency.
Updated 2026-01-24
Non-branded Search
Non-branded search targets generic queries. It can be more incremental but often has higher CPC and requires strong landing pages.
Updated 2026-01-23
Offer Structure
Offer structure is the bundle of price, discount, value framing, and risk reversal you present in ads and landing pages.
Updated 2026-01-28
Offline Conversions
Offline conversions link ad clicks to downstream outcomes that happen outside the website (for example CRM-qualified leads or closed-won deals).
Updated 2026-01-24
Phrase Match
Phrase match shows ads on queries that include the meaning of your keyword phrase, balancing reach and intent.
Updated 2026-01-24
Position-based Attribution (U-shaped)
Position-based attribution assigns most credit to the first and last touchpoints, with the remaining credit spread across the middle touches.
Updated 2026-01-24
Prospecting
Prospecting targets new audiences to acquire new customers. It typically has lower short-term ROAS but drives incremental growth.
Updated 2026-01-23
PSA Test
A PSA (public service announcement) test replaces your ads with neutral ads to estimate incrementality while keeping auction dynamics similar.
Updated 2026-01-24
Quality Score (search ads)
Quality score is an estimate of ad/landing relevance and expected CTR used by some platforms. It can influence CPC and impression share.
Updated 2026-01-23
Reach
Reach is the number of unique people who saw your ads over a period.
Updated 2026-01-23
Referral Exclusion
Referral exclusion prevents certain domains (for example payment providers) from taking credit as a referrer in analytics.
Updated 2026-01-24
Retargeting
Retargeting targets users who previously visited or engaged. It often has higher ROAS but can be heavily attribution-biased.
Updated 2026-01-23
Retention Remarketing
Retention remarketing targets existing customers to reduce churn, drive repeat usage, or expand accounts.
Updated 2026-01-28
ROAS (Return on Ad Spend)
ROAS is revenue generated per dollar of ad spend. Learn ROAS formula and how it connects to break-even and target ROAS.
Updated 2026-01-23
Search Terms Report
A search terms report shows the actual queries that triggered your ads in paid search, used to refine targeting and negatives.
Updated 2026-01-24
Self-referral
A self-referral happens when your own domain appears as a referral source, usually due to broken cross-domain tracking or misconfigured analytics.
Updated 2026-01-24
Server-side Tagging
Server-side tagging routes tracking events through your server or a server-side tag container to reduce loss from blockers and improve control.
Updated 2026-01-24
Statistical Power
Statistical power is the probability of detecting an effect of a given size if it truly exists (1 - beta). Higher power requires larger sample sizes.
Updated 2026-01-23
Statistical Significance
Statistical significance is a measure of whether an observed effect is likely to be real rather than due to random chance under a chosen false positive rate (alpha).
Updated 2026-01-23
Tag Manager
A tag manager (for example GTM) is a tool to deploy and manage tracking tags without code deploys (but you still need governance).
Updated 2026-01-24
Target CPA Bidding
Target CPA bidding tries to get as many conversions as possible at or below a target cost per acquisition. It relies on stable conversion definitions and volume.
Updated 2026-01-24
Target ROAS
Target ROAS is the ROAS you aim for to achieve a desired profit buffer after variable costs and fixed cost allocation.
Updated 2026-01-23
Target ROAS Bidding
Target ROAS bidding tries to maximize conversion value while hitting a target ROAS. It requires stable value tracking and enough data volume.
Updated 2026-01-24
Thumbstop Rate
Thumbstop rate is a creative metric for paid social that estimates how many users stop scrolling and pay attention to your ad (definitions vary by platform).
Updated 2026-01-24
Time-decay Attribution
Time-decay attribution assigns more credit to touchpoints closer in time to the conversion.
Updated 2026-01-24
Tracking Pixel
A tracking pixel is a snippet that records events (page views, purchases) for measurement and optimization in ad platforms.
Updated 2026-01-23
UTM Content
UTM content is an optional UTM parameter used to differentiate creatives, placements, or variations within a campaign.
Updated 2026-01-24
UTM Governance
UTM governance is the discipline of consistent naming, required fields, and QA for campaign tracking parameters.
Updated 2026-01-28
UTM Parameters
UTM parameters are URL tags (source/medium/campaign) used to track traffic in analytics tools.
Updated 2026-01-23
UTM Term
UTM term is an optional UTM parameter often used to track keywords in paid search (or any internal taxonomy you define).
Updated 2026-01-24
View-through Conversion
A view-through conversion is credited to an ad impression when the user saw the ad but did not click before converting within a lookback window.
Updated 2026-01-24
Finance
Accounts Payable (AP)
Accounts payable is money you owe suppliers/vendors for invoices received but not yet paid. It affects cash timing.
Updated 2026-01-23
Accounts Receivable (AR)
Accounts receivable is money owed by customers for invoices issued but not yet paid. It affects cash flow and collections risk.
Updated 2026-01-23
Accrual Accounting
Accrual accounting recognizes revenue when earned and expenses when incurred, not when cash is received or paid.
Updated 2026-01-24
Acid-test Ratio (Quick Ratio)
The acid-test ratio is a stricter liquidity ratio that excludes less-liquid current assets. It focuses on cash-like assets versus current liabilities.
Updated 2026-01-24
Allowance for Doubtful Accounts
An allowance for doubtful accounts is an estimate of receivables that may not be collected. It is used to recognize expected credit losses.
Updated 2026-01-24
Amortization
Amortization is the process of paying down a loan over time with scheduled payments that include both interest and principal.
Updated 2026-01-23
APR (Annual Percentage Rate)
APR is a nominal annual interest rate used to describe the cost of borrowing or the return on a product. APR does not directly include the effect of compounding.
Updated 2026-01-23
APY (Annual Percentage Yield)
APY is the effective annual rate after compounding. It makes products with different compounding frequencies easier to compare.
Updated 2026-01-23
Bad Debt
Bad debt is accounts receivable that are unlikely to be collected. It reduces profit and can create sudden cash strain if not forecasted.
Updated 2026-01-27
Balance Sheet
A balance sheet is a snapshot of assets, liabilities, and equity at a point in time. Working capital items (AR/AP/deferred revenue) live here.
Updated 2026-01-24
Billings
Billings are amounts invoiced in a period. Billings can differ from cash collected and recognized revenue due to timing.
Updated 2026-01-23
Break-even Point
Break-even point is where profit equals zero. It can be expressed in revenue or units depending on the model.
Updated 2026-01-23
Break-even Revenue
Break-even revenue is the revenue required to cover fixed costs given your gross or contribution margin.
Updated 2026-01-23
Burn Rate
Burn rate measures how quickly a company spends cash. Teams often track monthly gross burn and net burn.
Updated 2026-01-23
CapEx (Capital Expenditures)
CapEx is spending on long-lived assets (equipment, capitalized software). CapEx affects cash flow differently than operating expenses.
Updated 2026-01-23
CapEx Budget
A CapEx budget is a plan for capital spending on long-lived assets over a period, split into maintenance and growth projects.
Updated 2026-01-28
Capital Allocation
Capital allocation is how a company decides to invest cash across growth, maintenance, debt paydown, or returns to owners.
Updated 2026-01-28
Capital Charge
Capital charge is the dollar cost of capital applied to invested capital. It is used in EVA and value-based performance analysis.
Updated 2026-01-28
Capital Efficiency
Capital efficiency reflects how much output (revenue or ARR) you produce per dollar of capital invested or burned.
Updated 2026-01-28
Capital Structure
Capital structure is the mix of debt and equity used to finance a business. It drives risk, flexibility, and the weighted cost of capital.
Updated 2026-01-28
Cash Accounting
Cash accounting recognizes revenue and expenses when cash is received or paid. It can be simpler but may not reflect economic reality for longer-term contracts.
Updated 2026-01-24
Cash Balance
Cash balance is the amount of cash (and often cash equivalents) available at a point in time. It is the starting point for runway planning.
Updated 2026-01-24
Cash Break-even
Cash break-even is when cash inflows cover cash outflows (net burn is ~0). It can differ from accounting break-even due to timing.
Updated 2026-01-23
Cash Buffer Policy
A cash buffer policy sets the minimum cash balance the business will maintain to absorb shocks and avoid liquidity crises.
Updated 2026-01-28
Cash Burn Multiple
Cash burn multiple compares net burn to net new ARR to show how efficiently cash turns into growth.
Updated 2026-01-28
Cash Collection Forecast
A cash collection forecast estimates when receivables will turn into cash based on aging and payment terms.
Updated 2026-01-28
Cash Conversion Cycle (CCC)
The cash conversion cycle (CCC) measures how long cash is tied up between paying out cash (to suppliers) and collecting cash (from customers). It's a working-capital lens on runway.
Updated 2026-01-23
Cash Flow
Cash flow is the net movement of cash in and out of the business. It differs from profit due to working capital and timing.
Updated 2026-01-23
Cash Flow Forecast
A cash flow forecast projects cash in/out and ending cash balance over time to manage liquidity.
Updated 2026-01-28
Cash Flow Statement
A cash flow statement shows cash movement over a period, typically split into operating, investing, and financing cash flows.
Updated 2026-01-24
Cash Flow Volatility
Cash flow volatility measures how much cash inflows and outflows swing over time, affecting liquidity risk.
Updated 2026-01-28
Cash Interest Coverage
Cash interest coverage measures how many times cash flow can cover cash interest expense.
Updated 2026-01-28
Cash Receipts
Cash receipts are money collected from customers. They depend on billing terms, prepay, and collections timing.
Updated 2026-01-23
Cash Reserve
A cash reserve is a buffer of cash set aside to absorb shocks (revenue drops, delayed collections) without forcing emergency cuts.
Updated 2026-01-24
Cash Sweep
A cash sweep is a loan feature that uses excess cash to pay down debt automatically, accelerating amortization.
Updated 2026-01-28
Change in Working Capital
Change in working capital is the period-over-period movement in operating working capital (typically AR, inventory, AP). It explains cash shifts that do not show in profit.
Updated 2026-01-28
COGS (Cost of Goods Sold)
COGS are direct costs required to deliver the product/service. In SaaS, common COGS include hosting, third-party APIs, support, and payment processing depending on policy.
Updated 2026-01-23
Compounding
Compounding is earning interest on interest. More frequent compounding increases the effective annual rate (APY) for a given APR.
Updated 2026-01-23
Contribution Margin
Contribution margin is revenue minus variable costs. It covers fixed costs and then profit.
Updated 2026-01-23
Convertible Note
A convertible note is debt that typically converts into equity at a future priced round. It often includes an interest rate, a maturity date, and cap/discount conversion terms.
Updated 2026-01-23
Cost of Capital Buffer
Cost of capital buffer is the extra return you require above the base cost of capital to cover model risk and uncertainty.
Updated 2026-01-28
Cost of Debt
Cost of debt is the effective interest rate a company pays on its borrowings. In WACC, debt is often adjusted for taxes because interest can be tax deductible.
Updated 2026-01-23
Cost of Equity
Cost of equity is the return equity investors require for the risk of owning the business. It is a key input to WACC and discount rate selection.
Updated 2026-01-23
Covenant Headroom
Covenant headroom is the buffer between actual financial metrics and covenant thresholds in a debt agreement.
Updated 2026-01-28
Current Ratio
Current ratio measures short-term liquidity: current assets divided by current liabilities. Higher usually implies more near-term flexibility.
Updated 2026-01-24
Days Cash on Hand
Days cash on hand estimates how long cash can cover operating expenses without new inflows.
Updated 2026-01-28
Days Inventory Outstanding (DIO)
DIO estimates how many days inventory sits before it is sold. It is a component of the cash conversion cycle for inventory-heavy businesses.
Updated 2026-01-24
Days Payables Outstanding (DPO)
DPO estimates how many days, on average, you take to pay suppliers. Higher DPO can improve short-term cash timing, but it can also strain vendor relationships.
Updated 2026-01-23
Days Sales Outstanding (DSO)
DSO estimates how many days it takes, on average, to collect cash after you issue invoices. Lower DSO improves cash flow and runway.
Updated 2026-01-23
DCF (Discounted Cash Flow)
DCF values an asset or business by discounting expected future free cash flows back to present value and adding a terminal value for cash flows beyond the forecast period.
Updated 2026-01-23
Debt Amortization
Debt amortization is the scheduled repayment of principal over time, reducing the outstanding balance.
Updated 2026-01-28
Debt Capacity
Debt capacity is the amount of debt a business can support while maintaining acceptable coverage ratios and covenant buffers.
Updated 2026-01-28
Debt Schedule
A debt schedule tracks each facility's balance, interest rate, amortization, and maturity to model cash and covenant impacts.
Updated 2026-01-28
Debt to Equity (D/E)
Debt to equity compares total debt to total equity to show how leveraged a balance sheet is.
Updated 2026-01-28
Deferred Revenue
Deferred revenue is a liability representing cash collected (or billed) for services not yet delivered. It becomes recognized revenue over time as you deliver.
Updated 2026-01-23
Dilution
Dilution is the reduction in an existing shareholder's ownership percentage when new shares are issued (new financing, option grants, or convertible conversions).
Updated 2026-01-23
Discount Factor
A discount factor converts future cash flows into present value using a chosen discount rate and time period.
Updated 2026-01-28
Discount Rate
Discount rate is used to convert future cash flows into present value (time value of money). It's used in valuation models.
Updated 2026-02-16
DSCR (Debt Service Coverage Ratio)
DSCR compares cash available to debt obligations (principal + interest). Lenders use it to assess repayment capacity.
Updated 2026-01-24
EBIT (Operating Profit)
EBIT is operating profit before interest and taxes. It is used to compare operating performance across different capital structures.
Updated 2026-01-28
EBITDA
EBITDA approximates operating profit before interest, taxes, depreciation, and amortization. It is not the same as cash flow.
Updated 2026-01-23
EBT (Earnings Before Taxes)
EBT is profit before income taxes, showing earnings after interest but before tax effects.
Updated 2026-01-28
Effective Tax Rate
Effective tax rate is the actual tax expense divided by pre-tax income, reflecting credits and timing differences.
Updated 2026-01-28
Enterprise Value (EV)
Enterprise value (EV) represents the value of the operating business available to all capital providers (debt and equity). DCF models that discount unlevered free cash flows typically produce EV.
Updated 2026-01-23
Equity Value
Equity value is the value attributable to shareholders after subtracting debt and other senior claims and adding cash (relative to enterprise value). Public-market equity value is often approximated by market capitalization.
Updated 2026-01-23
Financing Cash Flow
Financing cash flow captures cash from debt and equity financing, and cash used for repayments, dividends, or buybacks.
Updated 2026-01-24
Fixed Charge Coverage
Fixed charge coverage measures how well cash flow covers fixed obligations like interest and lease payments.
Updated 2026-01-28
Fixed Costs
Fixed costs do not scale directly with volume in the short term (rent, base salaries, core tools). They matter for break-even and operating leverage.
Updated 2026-01-23
Free Cash Flow (FCF)
Free cash flow is cash generated by operations minus capital expenditures. FCF is a key measure of financial sustainability.
Updated 2026-01-23
Free Cash Flow Margin
Free cash flow margin shows free cash flow as a share of revenue, reflecting how much revenue turns into cash after CapEx.
Updated 2026-01-28
Gross Burn
Gross burn is the total cash outflow in a period (ignoring inflows). It helps you see the true spending level.
Updated 2026-01-23
Gross Margin
Gross margin is gross profit as a percentage of revenue. It is foundational for payback, LTV, and break-even analysis.
Updated 2026-01-23
Gross Profit
Gross profit is revenue minus COGS. Many unit economics models should use gross profit (not revenue) as the value created.
Updated 2026-01-23
Income Statement (P&L)
An income statement (P&L) summarizes revenue and expenses over a period. It shows profitability, but not necessarily cash timing.
Updated 2026-01-24
Inflation
Inflation is the general rise in prices over time, which reduces purchasing power. Inflation is why real return can differ from nominal return.
Updated 2026-01-23
Interest Coverage Ratio
Interest coverage ratio measures how easily a business can pay interest from operating earnings.
Updated 2026-01-24
Interest Expense
Interest expense is the cost of debt over a period (meaning cash interest plus any amortized fees).
Updated 2026-02-22
Interest Rate
Interest rate is the price of borrowing (or return on lending) expressed as a percentage over a time period. Make sure rates are compared on consistent bases (APR vs APY).
Updated 2026-01-23
Interest Rate Sensitivity
Interest rate sensitivity shows how changes in rates affect interest expense and cash flow, especially for floating-rate debt.
Updated 2026-01-28
Investing Cash Flow
Investing cash flow captures cash used for or generated from long-term investments (capex, acquisitions, asset sales).
Updated 2026-01-24
IRR (Internal Rate of Return)
IRR is the discount rate that makes NPV equal zero. It's commonly used to compare investment opportunities.
Updated 2026-01-23
Lifetime Gross Profit
Lifetime gross profit is the total gross profit expected from a customer over their lifetime (the value component in LTV).
Updated 2026-01-23
Liquidation Preference
Liquidation preference defines what preferred shareholders receive at an exit before common shareholders. A common structure is 1* non-participating preferred.
Updated 2026-01-23
Liquidity
Liquidity is the ability to meet near-term obligations with available cash or assets that can be quickly converted to cash.
Updated 2026-01-24
Maintenance CapEx
Maintenance CapEx is spending required to keep current operations running without expanding capacity.
Updated 2026-01-28
Margin of Safety
Margin of safety is the buffer between estimated intrinsic value and purchase price, used to protect against uncertainty.
Updated 2026-01-28
MARR (Minimum Acceptable Return)
MARR is the minimum return threshold used to evaluate investments. It is often used as a hurdle rate in capital budgeting and NPV decisions.
Updated 2026-01-28
Net Burn
Net burn is cash outflows minus cash inflows in a period (net cash loss). Runway calculations typically use net burn.
Updated 2026-01-23
Net Debt
Net debt is total debt minus cash and cash equivalents. It bridges enterprise value to equity value in valuation models.
Updated 2026-01-27
Net Interest Margin
Net interest margin measures the spread between interest income and interest expense relative to earning assets.
Updated 2026-01-28
Net Margin
Net margin measures how much profit remains after all expenses (including overhead, interest, and taxes) as a share of revenue.
Updated 2026-01-24
Net Working Capital
Net working capital is current assets minus current liabilities. It shows short-term funding tied to operations.
Updated 2026-01-28
NPV (Net Present Value)
NPV is the present value of future cash flows minus initial cost. NPV helps compare projects and investments.
Updated 2026-01-23
Operating Cash Conversion
Operating cash conversion compares operating cash flow to operating profit to show how much profit turns into cash.
Updated 2026-01-28
Operating Cash Flow
Operating cash flow is cash generated (or consumed) by core business operations, including working capital movement (AR/AP/deferred revenue).
Updated 2026-01-24
Operating Cash Margin
Operating cash margin measures operating cash flow as a share of revenue to show how efficiently revenue turns into cash.
Updated 2026-01-28
Operating Expense Ratio
Operating expense ratio measures operating expenses as a percentage of revenue.
Updated 2026-01-28
Operating Leverage
Operating leverage describes how profit changes as revenue grows when fixed costs are significant. SaaS often has high operating leverage at scale.
Updated 2026-01-23
Operating Margin
Operating margin is operating income divided by revenue. It reflects profitability after operating expenses.
Updated 2026-01-23
Operating Margin Rate
Operating margin rate shows operating profit as a percent of revenue, reflecting core profitability before interest and taxes.
Updated 2026-01-28
OpEx (Operating Expenses)
OpEx are ongoing operating costs (salaries, rent, marketing). OpEx drives operating margin and burn.
Updated 2026-01-23
Option Pool
An option pool is a reserve of equity (typically employee stock options) set aside for hiring and incentives. Option pools dilute existing shareholders on a fully diluted basis.
Updated 2026-01-23
Payback Period (finance)
Payback period is the time needed to recover an investment's cost from cash flows. In SaaS, 'CAC payback' is a specific variant.
Updated 2026-01-23
Post-money Valuation
Post-money valuation is the value of a company immediately after a new equity financing. It is commonly approximated as pre-money plus the new investment amount (simplified).
Updated 2026-01-23
Pre-money Valuation
Pre-money valuation is the value of a company immediately before a new equity financing. It is used with the investment amount to determine post-money valuation and implied ownership.
Updated 2026-01-23
Pricing Power
Pricing power is the ability to raise prices without losing demand. It affects ARPA/ARPU, margin, and payback.
Updated 2026-01-23
Principal
Principal is the amount borrowed (or invested) before interest. For loans, interest is calculated on the outstanding principal balance.
Updated 2026-01-23
Pro Rata Rights
Pro rata rights allow an existing investor to participate in a future financing to maintain ownership, typically by buying a proportional share of the new issuance (subject to terms and allocation).
Updated 2026-01-23
Profitability Index (PI)
Profitability index (PI) measures the present value of cash inflows per dollar invested. PI is useful when capital is constrained and you want value per dollar.
Updated 2026-01-23
Real Return
Real return is the inflation-adjusted return that reflects change in purchasing power rather than just nominal balances.
Updated 2026-01-23
Receivables Aging
Receivables aging breaks accounts receivable into buckets by how long invoices have been outstanding (for example 0-30, 31-60, 61-90 days).
Updated 2026-01-24
Recognized Revenue
Recognized revenue is revenue recorded as earned based on delivery over time. It can differ from billings and cash receipts.
Updated 2026-01-23
Revenue Recognition
Revenue recognition is the accounting process of recording revenue when earned (delivered), not necessarily when billed or collected.
Updated 2026-01-23
Revolving Credit
Revolving credit is a flexible debt facility that can be drawn, repaid, and redrawn up to a limit.
Updated 2026-01-28
Runway
Runway estimates how many months you can operate before running out of cash at the current net burn.
Updated 2026-01-23
Runway Extension Plan
A runway extension plan lays out actions to lengthen cash runway, such as expense cuts, pricing changes, or financing.
Updated 2026-01-28
SAFE (Future Equity)
A SAFE is an instrument that typically converts into equity at a future priced round. It often includes a valuation cap, a discount, or both to reward early investors.
Updated 2026-01-28
Sensitivity Analysis
Sensitivity analysis shows how outputs change when key inputs vary within a reasonable range. In valuation, it's used to test how fragile a DCF is to discount rate and terminal assumptions.
Updated 2026-01-23
Tax Shield
A tax shield is the tax savings from deductible expenses such as interest or depreciation.
Updated 2026-01-28
Terminal Value
Terminal value represents the value of cash flows beyond the explicit forecast period in a DCF. It often contributes a large share of enterprise value.
Updated 2026-01-23
Unit Margin
Unit margin is contribution per unit (customer/order). It drives scalability and informs allowable acquisition cost.
Updated 2026-01-23
Valuation Cap
A valuation cap sets a maximum valuation used when converting a SAFE or convertible note into equity in a priced round. A lower cap generally means a lower conversion price and more shares for the investor.
Updated 2026-01-23
Variable Costs
Variable costs scale with volume (payment fees, shipping, returns, usage-based infrastructure). They determine contribution margin.
Updated 2026-01-23
WACC (Cost of Capital)
WACC is a blended required return for capital providers (equity and debt). It is commonly used as a discount rate proxy in DCF models.
Updated 2026-01-28
Working Capital
Working capital reflects short-term assets and liabilities (receivables, payables, deferred revenue). It can cause profit and cash to diverge.
Updated 2026-01-23
Working Capital Policy
Working capital policy defines targets for receivables, payables, and inventory to balance growth with cash stability.
Updated 2026-01-28