Chad Varra, CFO of SendGrid, leads a discussion with members of the Boulder and Denver Software Clubs. These slides show some of the numbers and concepts to which Chad spoke.

1. Software Club – SaaS Series Finance – Chad Varra SendGrid, Inc.

5. Measuring Growth Monthly Recurring Revenue (MRR) Customers

7. MRR = Monthly Recurring Revenue JanuaryFebruary Beginning MRR $1,000 $1,275 New MRR 250 300 Increased MRR 100 100 Lost MRR (50) (60) Decrease MRR (25)(20) Ending MRR $1,275 $1,595

8. Customer Count JanuaryFebruary Beg Customer Count 5,000 5,130 New Customers 150 200 Lost Customers _(20)_ _(25) Ending Customer Count 5,130 5,305 Increase Customers 75 75 Decrease Customers (10) (10)

10. Customer Acquisition Cost (CAC) What does it cost to acquire a customer? How many months of MRR does it take to recover your costs of acquiring that customer?

11. CAC = (Sales + Marketing +Deploy Costs) # of Deals Closed Sales Costs = $100,000 Marketing Costs = $150,000 # of Deals Closed = 600 $100,000 + $150,000 = $416 CAC 600

12. How long does it take to recover the CAC? Payback Period = CAC/MRR per Customer Average MRR Per Customer = $100 $416/$100 = 4.16 months Rule of thumb: 12 months or less is good.

13. Lifetime Value of Customer (Average Lifetime of a Customer * MRR/Cust) - Cost of Revenue - CAC = Lifetime Value of Customer Lifetime of Customer = 36 mths 24 mths MRR per Customer = $100 $100 Margin = 80% 80% CAC = $416 (4.16 mth payback) $1,600 (16 mth payback) (36*$100)-$720-$416 = $2,464 (24*$100)-$480-$1,600 = $320 Rule of thumb: LTV that is greater than 3x CAC is good

14. Churn

15. So What Are Your Levers Increase MRR per customer Increase Customers Manage CAC Increase LTV Decrease Churn