What is SaaS Quick Ratio?
The SaaS quick ratio compares recurring revenue inflows (new, expansion, and reactivation MRR) with revenue outflows (churned and contraction MRR) over the same period. It shows how many dollars of new and expanded MRR you create for every dollar you lose, making it a fast proxy for growth quality, unit economics, and long-term value creation.
A high quick ratio means your go-to-market motion, product, and retention are working together to compound MRR; a low ratio warns that acquisition spend may be propping up a leaky subscription base. Founders, CFOs, and investors use it alongside ARR growth, NRR, gross margin, and cash runway to judge whether growth is efficient or just expensive.
Formula
Core definition using MRR components:
Where you can also define:
Net new MRR for the period is:
Example
Assume a SaaS business reports the following MRR movements this month:
- New MRR: $10,000
- Expansion MRR: $4,000
- Reactivation MRR: $1,000
- Churned MRR: $3,000
- Contraction MRR: $2,000
First compute growth and churn:
Now the quick ratio and net new MRR:
A quick ratio of 3× means the company adds $3 of growth MRR for every $1 lost to churn and downgrades—typically read as healthy but with room to improve retention and expansion toward best-in-class benchmarks around 4× and above.