For each executive we have a monthly call to discuss the metrics of that department in order to:
Some executives will have additional calls in areas that report to them based on the number and importance of metrics associated with the function.
Meetings are monthly starting on the 10th day after month end.
Required invites are the executive and the CFO. Optional attendees are the rest of the e-team and anyone who has an interest in the metric.
We want to get from Google Sheets to reviewing a live dashboard.
We are actively working to move away from the methodology of maintaining one Operating Metrics page.
Please do not update this section. Instead, please define a metric in-place, where it would make the most sense for that metrics to live in the handbook. For example, the Average Days to Hire metrics should live within the recruiting section of the Handbook.
For more details, see Emilie Schario, Data Analyst, and Sid Sijbrandij, CEO, discuss the best way to organize metrics definitions in the company handbook. Progress updates can be found in gitlab-data#1241.
Here's another follow up discussion that includes Joe Davidson, SDR, and brings additional clarity around addressing the ownership question.
Calculated billings is defined as revenue plus the sequential change in total deferred revenue as presented on the balance sheet.
We do not believe that calculated billings provides a meaningful indicator of financial performance as billings can be impacted by timing volatility of renewals, co-terming upgrades and multi year prepayment of subscriptions.
TCV less Total Operating Expenses. This metric tracks net cash consumed excluding changes in working capital (i.e. burn due to balance sheet growth). Since the growth in receivables can be financed with using cheap debt instead of equity is a better measure of capital efficiency than cash burn.
Defined as cash in the bank. Also counts short term securities that are readily convertable into cash within the next 90 days.
The change in cash balance from period to period excluding equity or debt financing. Average cash burn is measured over the prior three months. Runway is defined as the number of months based on cash balance plus available credit divided by average cash burn. Our target is that this metric is always greater than 12 months.
Lost or lowered contract value that occurs before a subscription renewal or subscription cancellation
We define customers in the following categorical level of detail:
Ultimate Parent Accountfield)
Because "customer" can have three different meanings whenever customer is used in presenting data it must be qualified by the type of customer. The default description is parent. When the default is used no further description is required. When account or subscription is being reported then the title or field description on the chart must be added to call out the basis for reporting. Metrics that are based on customer data should also carry a clarifying description.
Subscriptions: Given that subscriptions can consolidate, fan out, be renewed, and experience other kinds of transformations over time, counting subscriptions are less straightforward than counting accounts. The core principle is: if a subscription was active at any point in time in the proposed timeframe, it is counted as active.
Accounts and Parents: If an account was active at any point in time during the proposed timeframe it is counted as active. For example, an account that is active from March 2019 to May 2019 but is inactive from June 2019-on is counted for CY2019, FY2020 (which runs from February 2019-January 2020), 2020-Q1, and 2020-Q2; it is not counted in 2020-Q3 or 2020-Q4.
Average Accounts Receivable balance over prior 3 months divided by Total Contract Value (TCV) bookings over the same period multipied by 90 that provides an average number of days that customers pay their invoices. Link to a good definition and Industry guidance suggests the median DSO for SAAS companies is 76 days. Our target at GitLab is 45 days.
The amount of contractually committee line of credit extended by the bank that is not in default status.
Cash flow from operations as defined by GAAP less Capital Expenditures.
Total operating expenses plus capital expenditures.
Gross margin is defined as Revenue minus Cost of Sales divided by Revenue.
The amount of subscription revenue recognized using ratable accounting treatment as calculated by the subscription amount divided equally over the subscription term. Note that other GAAP adjustments such as non-delivery, performance obligations are not accounted for in this metric.
MRR times 12
ARR can be sliced many different ways for analysis. In the ARR by Cohort analyses, we look at ARR (as defined above) by the Fiscal Year Cohort. That analysis can be found on the Retention Dashboard.
Monthly recurring revenue from subscriptions that are active on the last day of the month plus (true-ups/12).
Subscription data from Zuora is the sole source of tracked MRR. The MRR value for a given month is based on the rate plan charge that is active on the last day of the month. True-up revenue is divided by twelve and added to the subscription MRR for the month it was charged.
Note that MRR values can change on a regular basis. The primary causes are customers updating, renewing, or canceling their subscriptions in a month different from when the original subscription ended. Updates increase and decrease the MRR values for all previous months of a subscription. Renewals increase MRR for all months since the start of the subscription. Cancellations decrease MRR for all months the subscription was active.
Marketing expense divided by the number of MQLs
IACV / marketing spend
Operating and product metrics for self-managed and GitLab.com instances can be found here.
IACV per won deal. This metric can be reported against various dimensions (e.g. ASP by customer segment, cohort, sales channel, territory, etc.)
Current Period subscription bookings which will result in revenue over next 12 months. For multiple year deals with contracted ramps, the ACV will be the average annual booking per year.
Value of new bookings from new and existing customers that will result in recurring revenue over the next 12 months less any credits, lost renewals, downgrades or any other decrease to annual recurring revenue. Excluded from IACV are bookings that are non-recurring such as professional services, training and non-recurring engineering fees (PCV). Also equals ACV less renewals. However, bookings related to true-up licenses, although non-recurring, are included in IACV because the source of the true-ups are additional users which will result in recurring revenue. IACV may relate to future periods (within twelve months).
Beg ARR + IACV may not equal ending ARR due to the following reasons:
Value of new bookings from new and existing customers that will result in recurring revenue over the next 12 months. Gross IACV includes true-ups and refunds.
Contract value that increases at the time of subscription renewal
Contract value from a new subscription customer
Contract value that is not considered a subscription and the work is performed by the Professional Services team
The total value of the contract that the customer will pay up front (i.e. within 90 days from close of deal)
Total Sales & Marketing Expense/Number of New Customers Acquired
Total Sales & Marketing Expense/ACV from new customers (excludes growth from existing). Industry guidance reports that median performance is 1.15 with anything less than 1.0 being considered very good. All bookings in period (including multiyear); bookings is equal to billings with standard payment terms.
Contract value that results in a lower value than the previous contract value. Downgrade examples include seat reductions, product downgrades, discounts, and customers switching to Reseller at time of renewal.
IACV / sales spend
Number of contracted users on active paid subscriptions. Excludes OSS, Education, Core and other non-paid users. Data source is Zuora.
Customer Life-Time Value = Average Revenue per Year x Gross Margin% x 1/(1-K) + GxK/(1-K)^2; K = (1-Net Churn) x (1-Discount Rate). GitLab assumes a 10% cost of capital based on current cash usage and borrowing costs.
The customer Life-Time Value to Customer Acquisition Cost ratio (LTV:CAC) measures the relationship between the lifetime value of a customer and the cost of acquiring that customer. A good LTV to CAC ratio is considered to be > 3.0.
Contract value that is lost at the time of subscription renewals. Lost Renewals examples include cancellations at or before the subscription renewal date.
IACV for trailing three months / Sales and marketing Spend over trailing months -6 to months -4 (one quarter lag) (see the details of this spend, as defined in the Sales Efficiency Ratio). Industry guidance suggests a good Magic Number is > 1.0. GitLab's target is to be at 1.1.
Net IACV that come from New Customers divided by the number of net closed deals in the current month.
Net IACV that come from New Customers and sold by the field sales team divided by the number of net closed deals in the current month.
ARR divided by number of Licensed Users
IACV / sales and marketing spend. Sales and marketing spend comes from Netsuite; it is all expenses from accounts between 6000 and 6999, inclusive. Industry guidance suggests that average performance is 0.8 with anything greater than 1.0 being considered very good. GitLab's target is greater than 1.
Monthly IACV * 12 / number of native quota-carrying sales reps
The IACV of all open opportunities currently in the stages of 4-Proposal, 5-Negotiating, and 6-Awaiting Signature.
The IACV of all open opportunities.
The value of previously closed Won ACV that is up for renewal. Renewal ACV should not include ACV from Professional Services or True-Ups.
Renewal ACV plus Growth IACV minus (Lost Renewals + Credits + Downgrades)
The value of the first twelve (12) months of any mid-term upgrade.
An unique deal that is set to
Closed Won in SalesForce.