Financial Modeling for SaaS
Building a financial model for a Software as a Service (SaaS) company typically requires creating a monthly model that forecasts users, subscriptions rates, churn rates, and average revenue per user (ARPU). From there, it resembles more of a traditional three-statement model and includes operating expenses, as well as SaaS specific metrics such as customer acquisition cost (CAC), customer lifetime value (LTV), the LTV/CAC ratio, and payback period. In addition, the models typically include a discounted cash flow (DCF) valuation, sensitivity analysis, and charts and graphs.
