What is the Quick Ratio in SaaS?

Quick Ratio in SaaS is a metric that shows how quickly a company compensates for revenue losses from customer churn through expanding existing customers and new sales.

Formula:

[ \text{Quick Ratio} = \frac{\text{Expansion MRR} + \text{New MRR}}{\text{Churned MRR}} ]

Where:

• Expansion MRR — additional income from existing customers (upsells, upgrades).
• New MRR — income from new customers.
• Churned MRR — lost income due to customer churn.

If Quick Ratio > 1, it means the company is growing faster than it is losing income. A value around 4 is considered excellent for SaaS business.

Example: if in a month, $10,000 MRR was lost, but $20,000 was gained from new and expanded customers, Quick Ratio = (20,000) / 10,000 = 2 — this is a good growth indicator.