SaaS Magic Number V2 Quarterly
Magic Number V2 = (Q current ARR - Q prior ARR) × 4 / Q sales & marketing spend. Above 0.75 healthy; 1.0+ = scale-fund.
| Current quarter ARR | — |
| Prior quarter ARR | — |
| Quarter S&M spend | — |
| Annualized ARR growth | — |
| Magic Number V2 | — |
SaaS Magic Number V2 measures sales efficiency by calculating how much annualized recurring revenue (ARR) you generate per dollar of sales and marketing spend. The V2 formula uses quarterly data, providing more granular insight than annual measures.
Formula and Benchmarks
Magic Number V2 = (Current Q ARR − Prior Q ARR) × 4 / Q S&M Spend. Below 0.5: poor efficiency. 0.5-0.75: acceptable. 0.75-1.0: healthy. 1.0-1.5: invest more. Above 1.5: world-class — scale aggressively.
When to Use
Best for B2B SaaS companies measuring CAC efficiency. Useful for board reporting, funding rounds, and operational decisions about whether to add sales reps. Track quarter over quarter for trends.
Caveats
Magic Number doesn't account for churn (use NDR alongside). Includes paid CAC plus organic — distinguish channels. Best correlated with gross margin (high-margin SaaS achieves higher Magic Number naturally).
Last updated May 2026. Sources: Bessemer Cloud Index.