Reference

KPI Glossary

Name: Clarifi
Author: Clarifi

Public formulas, methodology, and edge-case handling for the metrics most often referenced in IC packets.

ARR (Annual Recurring Revenue)

The annualized run-rate of recurring revenue at a given point in time.

Formula

ARR = MRR × 12

Source

Recognized recurring revenue from the accounting ledger (QuickBooks / Xero).

Edge cases

One-time fees and professional services excluded.
Annual contracts allocated 1/12th per month before the multiplier.
Multi-currency: aggregated at the period-close FX rate; mixed-currency flag surfaced.

MRR (Monthly Recurring Revenue)

Recurring revenue normalized to a monthly basis for the active period.

Formula

MRR = sum of monthly subscription revenue (recognized basis) for the period

Source

Recognized recurring revenue from the accounting ledger.

Edge cases

Annual / multi-year contracts allocated proportionally to each month.
Discounts applied at the contract level, not at the line-item level.
Cancellations counted in the month they take effect, not signed.

NRR (Net Revenue Retention)

Cohort-level revenue retention including expansions, contractions, and churn.

Formula

NRR = (starting MRR + expansion − contraction − churn) ÷ starting MRR

Source

Subscription movements from the billing system; cohort grouping by customer key.

Edge cases

Cohort defined as customers active at the start of the period; new customers excluded.
Currency conversions held constant within a cohort to avoid FX-induced retention drift.
Reported per period; rolling 12-month view also available.

GRR (Gross Revenue Retention)

Cohort retention excluding expansion: what percentage of starting revenue you held onto.

Formula

GRR = (starting MRR − contraction − churn) ÷ starting MRR

Source

Same as NRR; expansion movements excluded.

Edge cases

Capped at 100%. Expansion does NOT improve GRR.
Cohort definition mirrors NRR.

Burn Multiple

Capital efficiency: how many dollars burned per dollar of net new ARR.

Formula

Burn Multiple = net burn ÷ net new ARR

Source

Net burn and ARR both derived from the same accounting ledger.

Edge cases

Undefined when net new ARR is zero or negative; shown as not available rather than dividing by zero.
Self-sustaining when net burn is effectively zero (at or below one cent).
Reported per period; rolling 3-month view recommended for noise reduction.

CAC Payback

Months to recover customer-acquisition cost via gross-margin contribution.

Formula

CAC Payback = CAC ÷ (ARPU × Gross Margin)

Source

Sales / marketing GL accounts + new-customer count + gross margin from the same period.

Edge cases

Requires gross-margin input. If missing, shown as insufficient data rather than computed.
Reported per cohort; portfolio-level uses revenue-weighted average.

Runway

How many months of operating cash remain at the current gross burn rate.

Formula

Runway = cash on hand ÷ gross burn (COGS + OpEx)

Source

Cash from the connected accounting system (QuickBooks or Xero), or from manual entry; gross burn derived from COGS and operating expenses in the same period.

Edge cases

Self-sustaining when the business is not burning: display 'Self-sustaining' rather than a finite month count.
A net-burn runway (gross burn less cash receipts) is the more optimistic figure. It is shown only where it is labelled as such, never as the unqualified "Runway".
Forecast views use a month-by-month cash simulation when a forecast exists; otherwise they use the same cash ÷ gross burn basis.
An in-progress month has no usable rate. The last complete month is the anchor, and the open month is marked as such.
Display is capped at 120 months: values above the cap show as 120+ mo.

Rule of 40

Health benchmark combining growth and profitability. For SaaS companies, 40% is the institutional threshold.

Formula

Rule of 40 = revenue growth % + EBITDA margin %

Source

Revenue from the accounting ledger; EBITDA derived from operating-margin engine.

Edge cases

If a forecast is not available, shown as insufficient data rather than a fabricated 0%.
Both inputs taken on the same period basis (recognized revenue + EBITDA).
Displayed in percentage points (pp), not as a multiplier.

These are the 8 metrics most often referenced in IC packets. Every metric Clarifi computes carries the same formula transparency you see above. Request the full taxonomy under NDA via the contact page.

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