SaaS Quick Ratio Calculator
Compute SaaS Quick Ratio = (New MRR + Expansion) ÷ (Churn + Contraction). Mamoon Hamid's growth-efficiency metric, with his benchmark of 4. Not the accounting acid-test ratio.
SaaS Quick Ratio Calculator
Period
Enter all four MRR movements for the same period. Monthly is the canonical SaaS reporting cadence; quarterly is common for board reporting.
MRR gains (numerator)
MRR losses (denominator)
Gross adds vs gross losses
Sensitivity scenarios — which lever moves the needle
How to use the SaaS Quick Ratio Calculator
Pull the four MRR movements for the same period
From your billing system (Stripe, Chargebee, Recurly, ProfitWell), export the MRR breakdown for the period you want to measure — usually a single month. You need four numbers: New MRR (recurring revenue from customers who signed up this period), Expansion MRR (upgrades, seat adds, usage upticks from active customers), Churn MRR (revenue lost from full cancellations), and Contraction MRR (downgrades and seat removals from customers who stayed). Make sure all four cover the same window — mixing a quarterly New figure with monthly Churn is a common error.
Separate churn from contraction carefully
Churn is revenue from customers who cancelled outright; contraction is revenue lost from customers who stayed but pay less. Keep them separate in your own reporting, because the remedies differ, but both go in the denominator. If your billing system cannot split them, enter the combined figure as churn.
Read the ratio band and the verdict
The hero number is your Quick Ratio. Mamoon Hamid, who introduced it, called 4 or above "quite desirable", a ratio close to 2 "real trouble", and a ratio of 1 a "treadmill". The page draws its lines at those points: 4 and above, 2 up to 4, 1 up to 2 (trouble), and below 1 (shrinking, because you lose more than you gain). The note under the verdict shows how much of your gain came from new customers and how much from existing ones paying more.
Use the sensitivity table to find your highest-leverage lever
The sensitivity table re-runs the ratio under six changes: churn halved, churn and contraction halved, expansion doubled, new MRR down 30%, churn and contraction doubled, and a combined case. Each row changes only what its label says. Compare the rows to see which change would move your ratio most at your current numbers; the answer depends on your own mix.
SaaS Quick Ratio — the growth-efficiency metric that exposes leaky-bucket businesses
The SaaS Quick Ratio compares the recurring revenue a subscription business adds in a period with the recurring revenue it loses. Add new MRR (from new customers) and expansion MRR (existing customers paying more); divide by churned MRR (cancellations) and contraction MRR (downgrades). A ratio of 4 means four dollars gained for every dollar lost. Below 1, the business is shrinking in revenue terms even if it is still signing new customers.
Where it comes from
The metric was introduced by Mamoon Hamid of Social Capital at the first SaaStr Annual conference; ChartMogul dates that to 2015. Speaking at SaaStr two years later (Mamoon Hamid at SaaStr Annual), Hamid defined it as brand-new revenue from new customers plus expansion revenue from existing customers, divided by revenue from customers lost or contracted, and said that "a quick ratio of four, is quite desirable, four or above." In the same talk he described a company whose ratio fell "close to two" as "real trouble", and one at 1 as "pretty much in a treadmill": for every dollar of revenue added, a dollar lost.
"A bunch of data suggests that a quick ratio of four, is quite desirable, four or above." Mamoon Hamid at SaaStr Annual
Not the accounting quick ratio
In accounting, the quick ratio, or acid-test ratio, is a liquidity measure: liquid current assets, without inventory, divided by current liabilities. It asks whether a company can pay its short-term debts. The SaaS Quick Ratio uses revenue flows rather than balance-sheet items and measures growth efficiency. The two share a name and nothing else, so say "SaaS Quick Ratio" when there could be doubt.
Reading it carefully
The same ratio can hide very different businesses. Adding 130 and losing 30 gives a ratio of 4.33; adding 300 and losing 200 gives 1.50, although both grew by 100. The ratio also moves a lot from month to month in a small business, where one large customer can dominate either side; a three-month view is steadier. It is only as good as the inputs: contraction is easy to under-count, and one-off fees do not belong in new MRR.
Hamid's 4, his "real trouble" at 2, and the treadmill at 1
SaaS Quick Ratio = (new MRR + expansion MRR) ÷ (churned MRR + contraction MRR).
It was introduced by Mamoon Hamid of Social Capital at the first SaaStr Annual, which ChartMogul dates to 2015.
Hamid called a ratio of 4 or above "quite desirable": four dollars added for every dollar lost.
Hamid called a ratio close to 2 "real trouble" and a ratio of 1 a "treadmill"; this page draws its lines at 1, 2 and 4 from those remarks.
A ratio below 1 means recurring revenue is falling, whatever is happening to the customer count.
It has nothing to do with the accounting quick ratio, which measures liquidity from the balance sheet.
Adding 130 and losing 30 gives 4.33; adding 300 and losing 200 gives 1.50, though both grew by 100.
Churn is customers lost; contraction is customers who stay but pay less. Both reduce the ratio.
In a small business one large customer can swing the ratio, so a three-month view is steadier.
Counting one-off fees as new MRR or leaving out downgrades inflates the ratio.
Frequently Asked Questions
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No. The accounting quick ratio, or acid-test ratio, divides liquid current assets (excluding inventory) by current liabilities and measures whether a company can meet short-term debts. The SaaS Quick Ratio divides recurring revenue gained by recurring revenue lost and measures growth efficiency. Say "SaaS Quick Ratio" when talking to people outside subscription businesses.
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You lose more recurring revenue than you gain, so revenue is falling even if the number of customers is rising. New customers alone cannot fix it while losses outweigh gains; the fix has to come from keeping customers and growing what they pay.
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Because that is the benchmark the metric's originator set. Mamoon Hamid of Social Capital said at SaaStr that "a quick ratio of four, is quite desirable, four or above": four dollars gained for each one lost. He gave no single cut-off below it, but called a ratio close to 2 "real trouble" and a ratio of 1 a "treadmill", and this page's lower bands follow those words.
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Mamoon Hamid, then at Social Capital, introduced it at the first SaaStr Annual conference, which ChartMogul dates to 2015. In a later SaaStr talk he defined it as new revenue from new customers plus expansion revenue from existing customers, divided by revenue lost from customers who left or contracted.
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Churn MRR is revenue lost from customers who fully cancelled — the subscription is gone, the account is closed. Contraction MRR is revenue lost from customers who are still active but paying less — they downgraded their plan, removed seats, or dropped usage tiers. Both reduce MRR, and they usually call for different responses: a customer who has left has to be won back, while one who downgraded is still there to be upgraded again. The Quick Ratio puts both in the denominator because both reduce MRR; keep them apart in your own reporting.
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Net revenue retention looks only at the customers you started the period with: their revenue at the end, after expansion, contraction and churn, divided by their revenue at the start. The Quick Ratio adds new customers to the gains, so it describes total growth efficiency. A business whose expansion outweighs its churn and contraction has NRR above 100%, and it will have a Quick Ratio above 1 even with no new customers.
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Monthly is the canonical SaaS reporting cadence and the period most often quoted. Quarterly smooths out noise and is common for board reports and investor updates. Use the same period for all four inputs — mixing a quarterly New MRR with monthly Churn produces a meaningless ratio. For very small or early-stage SaaS where monthly numbers are too lumpy (single big deals distort the ratio), use a trailing three-month average to reduce noise without losing signal.
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The most common methods are: (1) under-counting contraction by treating seat removals or plan downgrades as neutral movements; (2) excluding annual-contract non-renewals from churn by classifying them as "natural expiration" rather than churn; (3) counting one-time setup fees or professional-services revenue as New MRR; (4) reporting GROSS adds without the corresponding losses. An investor who recomputes the ratio from your billing system's MRR movements will find any of these, so report the ratio the way they will compute it.
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We have not found published data showing a different benchmark for Southeast Asian SaaS, so this page no longer claims one. The ratio is arithmetic and means the same everywhere; how investors read it depends on the company's stage, market and the investors themselves.
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No. All calculation happens entirely in your browser via JavaScript — no server, no analytics on the inputs, nothing sent over the network. Open DevTools → Network and watch — there is zero outbound traffic from the calculator. Safe to use with real MRR figures.
Method & sources
How it computes
SaaS Quick Ratio = (new MRR + expansion MRR) / (churned MRR + contraction MRR), net new MRR, the run-rate (net x 12, or x 4 for a quarter), the gain mix and six sensitivity rows, in integer cents (SaasQuickRatioKernel). Bands follow Mamoon Hamid at SaaStr: 4 or above "quite desirable", close to 2 "real trouble", 1 a "treadmill"; below 1 revenue is shrinking. The band is read from the ratio shown to two decimals.
What this tool implements
- Hamid, at SaaStr Annual, defined the ratio as new revenue from new customers plus expansion revenue from existing customers, divided by revenue from customers lost or contracted, and said "a quick ratio of four, is quite desirable, four or above". ChartMogul dates the metric's introduction to 2015.
- The lower bands come from the same talk: a ratio "hovering close to two" is "trouble. That's real trouble", and at one "you're pretty much in a treadmill". The page draws its lines at 1, 2 and 4 from those remarks and says so.
- Division by zero is reported, not rounded away: gains with no losses is an unbounded ratio with its own label, and no movement at all gives no ratio. A negative amount, or a grouped number such as "1,234", is refused rather than read as something else.
- Corrected 2026-10-17: the 2-to-4 band was labelled "Healthy" although Hamid calls a ratio near 2 "real trouble"; the "churn doubles" and "cut churn 50%" sensitivity rows also moved contraction without saying so; an unsourced note that halving churn beats doubling new MRR "for most SaaS"; 0/0 shown as "Elite"; an unsourced claim that investors' diligence ratio is "almost always lower"; worked example 4.3 shown as 4.33, the figure the tool prints.
- Removed as unsourced (2026-10-01 pass): Snowflake/Datadog/Notion ratios of 5-8x, an ASEAN benchmark of 3-4, expansion costing a fraction of new-logo CAC, the acid-test ratio's origin in Graham (1934), named Singapore companies and contraction-share ranges.
Sources
- Hamid M. Social Capital: the numbers that actually matter to founders (SaaStr Annual, video transcript). SaaStr. https://www.saastr.com/mamoon-hamid-social-capital-numbers-actual…
- ChartMogul. SaaS Quick Ratio: how efficient is your growth? https://blog.chartmogul.com/saas-quick-ratio/
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