Net Magic Number Quarterly Calculator
The Net Magic Number is annualised net new ARR divided by prior-quarter sales-and-marketing spend. Unlike gross magic number it accounts for churn and contraction, making it the truer test of sales efficiency favoured by SaaS investors.
Net Magic Number Versus Gross
The gross version uses new ARR only — ignoring churn and contraction. The net version subtracts churned ARR first, exposing whether sales is genuinely growing the book or just replacing leakage. Public SaaS reporting (Snowflake, Datadog, Atlassian) has shifted toward the net metric.
Benchmark Interpretation
OpenView's annual SaaS Benchmarks report places top-quartile B2B SaaS at 1.2 or above. Median is around 0.75. Below 0.5 typically forces a revised hiring plan or a freeze on outbound expansion.
Common Pitfalls When Calculating
Use prior-quarter S&M, not current quarter, because spend takes time to convert. Include all fully-loaded sales and marketing costs. Annualise the new ARR by multiplying by four — do not project forward.
Source: OpenView SaaS Benchmarks Report 2025, Snowflake/Datadog public filings. Last updated: May 2026.