SaaS Quick Ratio Calculator
SaaS Quick Ratio = (New MRR + Expansion MRR) / (Churned MRR + Contraction MRR). Coined by Mamoon Hamid (Kleiner Perkins). >4 elite growth, 2-4 healthy, 1-2 watch, <1 declining. Source: openview.com.
Quick Ratio Formula and Interpretation
Quick Ratio = (New MRR + Expansion MRR) / (Churned MRR + Contraction MRR). >4: elite growth, gains dominate. 2-4: healthy growth. 1-2: gains barely outpace losses — watch. <1: declining business. Source: Mamoon Hamid Kleiner Perkins, openview.com framework.
Quick Ratio Distinguishes Growth Mode
A company with $100k new + $10k expansion = $110k gains vs $20k churn + $5k contraction = $25k losses. Quick Ratio = 4.4 (elite). Same gains but $80k losses = 1.375 (watch). High Quick Ratio reflects efficient growth not paying for retention with new sales. Investors prefer high Quick Ratio over absolute MRR growth alone.
Quick Ratio vs NRR
NRR tracks existing customers only (expansion vs churn). Quick Ratio includes new acquisition too. Both useful: NRR isolates retention quality; Quick Ratio shows growth dynamics including acquisition health.
Improving Quick Ratio
(1) Reduce churn (most impactful — denominator). (2) Add expansion paths (numerator boost). (3) Accelerate new acquisition (numerator). (4) Eliminate worst-performing tiers that produce contraction. Salesforce, Slack maintained >5 Quick Ratio at multi-billion revenue.
Frequently Asked Questions
What is a good SaaS Quick Ratio?
>4 elite, 2-4 healthy, 1-2 watch, <1 declining. Source: Mamoon Hamid/Kleiner Perkins.
How is Quick Ratio different from NRR?
NRR = existing cohort retention. Quick Ratio includes new customer acquisition. Quick Ratio is wider-scope growth health metric.
Can early-stage SaaS have high Quick Ratio?
Yes — early SaaS often has minimal churn (small customer base) and high new MRR, producing very high ratios (10+). Becomes harder as base grows.
Why is denominator important?
Losses (churn + contraction) compound. Low churn lets you scale efficiently. High churn forces you to constantly replace lost revenue with new sales — exhausting and expensive.
Does Quick Ratio account for upgrades?
Yes — Expansion MRR is in the numerator. Upgrades are counted positively, contraction (downgrades) in denominator.