Every metric a buyer needs to read a SaaS target's revenue correctly, defined from the acquirer's side of the table. It moves a valuation, and how ChurnLens reconstructs it from raw subscription data.
Definition: The process of investigating a SaaS company's financial, operational, and technical health before acquisition.
SaaS due diligence has traditionally focused on financials, code quality, and legal compliance. Revenue-quality diligence — churn analysis, concentration scoring, retention tracking — is the emerging third pillar that separates sophisticated acquirers from the rest.
ChurnLens automatically calculates saas due diligence from raw SaaS billing data, providing acquirers with instant, objective metrics instead of founder-provided numbers.
The process of investigating a SaaS company's financial, operational, and technical health before acquisition.
SaaS due diligence has traditionally focused on financials, code quality, and legal compliance.
Definition: The degree to which a SaaS company's revenue depends on a small number of customers. Measured via HHI (Herfindahl-Hirschman Index).
High revenue concentration is the #1 hidden risk in SaaS acquisitions. A company with 40% of revenue from 3 customers has a fragile revenue base — losing one could crater valuation. The HHI score quantifies this risk. Scores above 2,500 signal 'highly concentrated' and warrant a discount to valuation.
ChurnLens automatically calculates revenue concentration from raw SaaS billing data, providing acquirers with instant, objective metrics instead of founder-provided numbers.
The degree to which a SaaS company's revenue depends on a small number of customers. Measured via HHI (Herfindahl-Hirschman Index).
High revenue concentration is the #1 hidden risk in SaaS acquisitions.
Definition: The percentage of recurring revenue retained from existing customers, including expansion, contraction, and churn.
NRR above 100% means existing customers are expanding faster than they churn — the hallmark of a healthy SaaS. But NRR alone can mask logo churn. A company with 120% NRR and 30% logo churn is riskier than one with 105% NRR and 5% logo churn.
ChurnLens automatically calculates net revenue retention (nrr) from raw SaaS billing data, providing acquirers with instant, objective metrics instead of founder-provided numbers.
The percentage of recurring revenue retained from existing customers, including expansion, contraction, and churn.
NRR above 100% means existing customers are expanding faster than they churn — the hallmark of a healthy SaaS.
Definition: The percentage of customer accounts (logos) retained over a period — distinct from dollar-based net retention.
Logo retention reveals customer satisfaction separate from expansion revenue. A company can show 120% NRR while losing 30% of its customers — the remaining ones are just spending more. Logo retention below 80% annually is a red flag for acquirers.
ChurnLens automatically calculates logo retention from raw SaaS billing data, providing acquirers with instant, objective metrics instead of founder-provided numbers.
The percentage of customer accounts (logos) retained over a period — distinct from dollar-based net retention.
Logo retention reveals customer satisfaction separate from expansion revenue.
Definition: Customer churn specifically on annual subscription plans — often hidden because annual contracts mask monthly exit patterns.
Annual-plan churn is the silent killer of SaaS valuations. Founders report '2% monthly churn' but exclude annual-plan non-renewals. When 40% of annual customers don't renew, the real churn picture is dramatically worse. ChurnLens specifically surfaces this.
ChurnLens automatically calculates annual plan churn from raw SaaS billing data, providing acquirers with instant, objective metrics instead of founder-provided numbers.
Customer churn specifically on annual subscription plans — often hidden because annual contracts mask monthly exit patterns.
Annual-plan churn is the silent killer of SaaS valuations.
Definition: Customers who continue paying but have stopped using the product — at high risk of churning at renewal.
Inactive paid accounts are 'zombie MRR' — revenue that appears healthy but is one billing cycle from disappearing. If 15%+ of accounts show zero activity in 60+ days, expect a wave of churn when annual contracts come up for renewal.
ChurnLens automatically calculates inactive paid accounts from raw SaaS billing data, providing acquirers with instant, objective metrics instead of founder-provided numbers.
Customers who continue paying but have stopped using the product — at high risk of churning at renewal.
Inactive paid accounts are 'zombie MRR' — revenue that appears healthy but is one billing cycle from disappearing.
Definition: Month-over-month decrease in Monthly Recurring Revenue, one of the earliest warning signs of a struggling SaaS business.
MRR decline is the canary in the coal mine. Even a single month of MRR contraction often precedes larger problems — customer churn typically lags product/market deterioration by 2-3 months. Acquirers should treat any MRR decline in the last 6 months as a red flag requiring deeper investigation.
ChurnLens automatically calculates mrr decline from raw SaaS billing data, providing acquirers with instant, objective metrics instead of founder-provided numbers.
Month-over-month decrease in Monthly Recurring Revenue, one of the earliest warning signs of a struggling SaaS business.
MRR decline is the canary in the coal mine.
Definition: A composite metric that estimates the probability of significant customer churn in the next 12 months.
ChurnLens' Churn Risk Score combines revenue concentration, logo retention trends, inactive account ratios, and MRR trajectory into a single 0-100 score. Below 30 means 'caution warranted.' Above 70 means 'revenue quality is strong.'
ChurnLens automatically calculates churn risk score from raw SaaS billing data, providing acquirers with instant, objective metrics instead of founder-provided numbers.
A composite metric that estimates the probability of significant customer churn in the next 12 months.
ChurnLens' Churn Risk Score combines revenue concentration, logo retention trends, inactive account ratios, and MRR trajectory into a single 0-100 score.
Definition: Herfindahl-Hirschman Index, a measure of market/revenue concentration. For SaaS diligence, it quantifies customer concentration risk.
The HHI score is calculated by squaring each customer's revenue share and summing them. A company with 10 equal customers scores 1,000 (diversified). A company with one customer at 50% and 5 at 10% each scores 3,000 (highly concentrated). Scores above 2,500 warrant a valuation discount.
ChurnLens automatically calculates hhi score from raw SaaS billing data, providing acquirers with instant, objective metrics instead of founder-provided numbers.
Herfindahl-Hirschman Index, a measure of market/revenue concentration. For SaaS diligence, it quantifies customer concentration risk.
The HHI score is calculated by squaring each customer's revenue share and summing them.
Definition: Customer acquisition cost — total sales and marketing spend over a period divided by the number of new customers that period produced. It is a spend-side metric, not a billing-side one.
CAC answers “what did it cost to buy this customer?” If a target spent $120,000 on sales and marketing in a quarter and closed 200 new accounts, blended CAC is $600. Buyers usually want CAC split by channel, because a blended figure hides the difference between cheap organic signups and expensive paid ones — and a target whose growth depends entirely on paid acquisition is a very different asset after the ad budget changes hands.
CAC is only half of a ratio. The half that matters to an acquirer is how long the customer stays and how their revenue moves while they do. A $600 CAC is excellent against a customer who retains for three years and expands, and ruinous against one who churns in five months. This is why CAC payback — CAC divided by gross margin per month — is the figure buyers actually underwrite, and why it collapses the moment churn is worse than the seller represented.
ChurnLens does not calculate CAC. It reads subscription and billing data, which records what customers paid — not what was spent to acquire them. Sales and marketing spend lives in the target's ad accounts and general ledger, and you should ask for it directly during diligence.
What ChurnLens does is fix the other half of the ratio. Sellers routinely present CAC payback using their own churn assumption; when the real retention curve is worse, every payback and LTV figure built on it is overstated. ChurnLens reconstructs actual logo retention, revenue churn, and revenue decay from the raw subscription data, so you can recompute CAC payback against the churn the CSV shows rather than the churn the deck claims.
Customer acquisition cost: total sales and marketing spend for a period divided by the number of new customers acquired in that period.
No. CAC requires sales and marketing spend, which is not present in subscription or billing data. ChurnLens measures the retention side — logo retention, revenue churn, and revenue decay — which is what CAC payback and LTV depend on.
Most buyers look for CAC payback under 12 months for SMB-focused SaaS and under 18–24 months for enterprise. The number is only meaningful if the churn assumption underneath it is the real one.
Analyze revenue concentration, logo retention, and hidden churn before you buy. Free SaaS due-diligence tool.
Try ChurnLens Free →