SaaS Magic Number

Definition

Sales efficiency: net-new ARR generated per dollar of the PRIOR quarter's S&M spend.

Formula

Magic number = Net-new ARR (quarter) / S&M spend (prior quarter)

Worked Example

Net-new ARR this quarter $68,400; prior-quarter S&M $54,000:

Magic number = 1.27

> 1.0  efficiency supports stepping on the gas
0.5-1  acceptable, watch closely
< 0.5  fix the engine before fueling it

Interpretation & Pitfalls

The one-quarter lag matters: this quarter's revenue was bought by last quarter's spend.

In TupicFinance

Quarterly S&M cost aggregates and ARR movement supply both terms.