What is the SaaS quick ratio?
The SaaS quick ratio measures growth efficiency: the revenue you add through new business and expansion, divided by the revenue you lose to churn and contraction. A quick ratio of 4 means you add four dollars for every dollar lost.
This is not the accounting quick ratio, the liquidity measure of current assets over current liabilities. The SaaS quick ratio is a growth metric, and the two share only a name.
The quick ratio formula.
SaaS quick ratio = (new MRR plus expansion MRR) divided by (churned MRR plus contraction MRR). Higher means your growth is outrunning your losses by a wider margin.
Use one period for all four inputs. The ratio is a snapshot of how efficiently that period's growth held up against leakage.
A worked example.
In a month you add 300,000 dollars of new MRR and 100,000 of expansion, and lose 50,000 to churn and 20,000 to contraction. Quick ratio is 400,000 divided by 70,000, which is 5.71.
What is a good SaaS quick ratio?
For a growth-stage SaaS, 4 or higher is the mark of efficient growth: you are adding far more than you lose. 2 to 4 is healthy. Between 1 and 2 you are still growing, but losses are eating most of the gains. Below 1, the base is shrinking.
A high quick ratio with high churn is fragile. If both your gains and losses are large, dig into the churn even when the ratio looks fine, because the revenue churn rate is doing real damage underneath.
How to improve your quick ratio.
Add more efficiently, or lose less. The denominator is often the faster win, since cutting churn and contraction lifts the ratio immediately.
On the numerator, better-fit customers from intent-driven channels both convert and retain better. See how we bring better-fit B2B SaaS customers through SEO.