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Fast growth skews all of those numbers, because there's a lag between marketing/sales spending and the ensuing revenue - especially for SaaS businesses where re
by azernik 8y ago
Fast growth skews all of those numbers, because there's a lag between marketing/sales spending and the ensuing revenue - especially for SaaS businesses where revenue is subscription-based, and typically trickles in over a period of years.
To figure out the long-term sustainability of a business, you therefore have to compare spending, revenue, revenue growth, and churn rate (or a more complicated measure which Slack is using in this filing, Net Dollar Retention Rate) in complicated formulas that I don't know off the top of my head.
(Net Dollar Retention Rate over time is one of their three "Key Business Metrics", reflecting its importance in determining steady-state viability.)