Contracted Annual Recurring Revenue (CARR) and Annual Recurring Revenue (ARR) are commonly used terms in the SaaS and Cloud Industry but are not standardized leading to inconsistent calculation. In fact, they were the first two metrics the SaaS Metrics Standards Board published standards upon.

Dave and Ray discuss the current definitions, calculations and how Usage-Based Pricing is impacting the historic ARR reporting model.

During today's episode CAC and Growth cover the following topics:

• Contracted Annual Recurring Revenue (CARR) - Definition and Calculation
• Annual Recurring Revenue (ARR) - Definition and Calculation
• Usage-Based Pricing and impact on revenue reporting
• Introduction of Recurring and Re-ocurring revenue
• Reporting variable revenue from Usage-Based Pricing models

With ARR not being a FASB / GAAP Revenue reporting standard - the opportunity and challenges for having multiple calculation and reporting models is easy to identify - but hard to rectify.

If you are using, considering using or do not use Usage-Based Pricing this conversation and episode is a great listen.

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Free Cash Flow is a key metric for any SaaS investor and thus for SaaS CFOs and CEOs. Moreover Free Cash Flow Margin is a key variable in the Rule of 40 - a key enterprise value creation metric. Dave "CAC" Kellogg and Ray "Growth" Rike dive deep into the value behind the FCF metric and the different ways to calculate!

During this episode Dave and Ray discuss the following elements of Free Cash Flow:

• Where to find Free Cash Flow on public company filings
• The three primary Cash Flow statements
• Different formulas to calculate Free Cash Flow
• The impact of capitalizing sales commissions and R&D
• The Rule of 40 calculation - Free Cash Flow as the profitability metric

Free Cash Flow is not a metric limited to B2B SaaS companies but has become an increasingly important metric to SaaS investors as the industry matures as measured by how Enterprise Value has become more correlated to a blend of growth and profitability.

This episode is a great listen for anyone interested in the core financial metrics that impact the value of a B2B SaaS company!

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Bessemer Venture Partners recently released their 9th annual Cloud 100 Report. Dave "CAC" Kellogg and Ray "Growth" Rike dive deep into the impact of AI companies on the top 100 private cloud companies which increased their aggregate enterprise value to $820B and increased their growth rate to 70%!

Key highlights Dave and Ray discuss include:

• Aggregate enterprise value of the Cloud 100 increased 25% year over year
• Average growth rate increased from 55% in 2023 to 70% in 2024
• 97% of the Cloud 100 will be over $100M ARR by the end of the year
• Top 10 companies in the Cloud 100 represent ~ 30% of the total Enterprise Value
• Ai companies represent the top category of the Cloud 100 EV (21% of total)
• EV:Revenue multiples are down YoY (23x) but still at very attractive levels

As a follow-on to the BVP "State of the Cloud 2024 Report" the Cloud 100 highlights the era of AI has moved from hype to reality as measured by growth rates and enterprise value!

If you are interested in the latest "CLOUD" industry trends as measured by company value, revenue growth rates and industry impact this episode is a must listen!

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