L/S SaaS Modeling

Learning how to do SaaS modeling but real confused over here with the RPO, cRPO, billings nonsense. 

Can anyone in a SM talk about how you model SaaS names? Do you waterfall stuff? How do you incorporate RPO information into it?

Any good resource, free / paid, I can read to understand wth is going on when revenue is the least important metric apparently? 

 

take a look at TheSaasCFO. seems like a solid place to learn and understand everything about saas business models. hope it can help you

www. thesaascfo .com/

 

Thx. 

I more particularly want understand how public SaaS investors pay attention to. This CFO person has insider view, but I am hoping to shadow someone who has same level of access to data like I do as public person. 

 

I’ve covered the sector for 10 yrs on SS. poster above saying revenue is best metric doesn’t know what they are talking about. The holy grail metric is net new ACV and net new ACV essentially is net new ARR. sub revs x 4 doesn’t equal ARR either so don’t do that. 

billings, cRPO and RPO are all key metrics but it differs from company to company. 12 month crpo disclosures you should look at Crpo bookings and billings. If company does 3-5 year deals total RPO bookings might be best metric. For companies where timing of invoice jumps around RPO is better vs billings. Every metric has its flaw and it ultimately depends on company. Happy to help more .

 

Nice. Thx. 

I am reading this Salesforce and Splunk investor day that they talk about all this 101 stuff, it has all the terms you talked about but I'm still confused. WTH is RPO bookings? That's different from RPO? 

Any resource online you could pt me to that can tie all these things together? Like, how billings, RPO, cRPO, RPO bookings, CRPO bookings, ARR, ACV, bookings link together? 

 
Most Helpful

Bookings = this quarter’s revenue + QoQ change in RPOs

Billings = this quarter’s revenue + QoQ change in deferred revenue

Think of it:

Rep makes a sale: 5yr deal for a saas (not on prem) product

1 quarter is booked for revenue

4 quarters are billed for (assuming annual billings)

16 quarters go into RPO

So as you progress to year 2, four quarters are pulled out of the 16 quarter jar and you bill for them then recognize as each quarter passes.

So the RPO jar fills up based on your reps driving bookings. But those bookings don’t necessarily mean cash is collected (billings) or revenue is recognized until the service is delivered.

 

Could you share how do you calculate an ACV from the RPO / booking ./ billing stuff? 

What's the reason why SS models "waterfall" billiings into revenue? 

 

Look through Q&A portion from sell-side in earnings transcripts of public SaaS companies and then look in investor presentations / 10Qs / 10Ks for the meaning of any metrics mentioned

Example with Datadog (DDOG):

"OK. Perfect. And then David, in these kind of uncertain times, a lot of the time you have negotiations or a vendor has negotiated with customers around billing, billings terms, etc. Have you seen anything that is impacting you or that you can note? Thank you."

https://www.fool.com/earnings/call-transcripts/2022/11/03/datadog-ddog-q3-2022-earnings-call-transcript/

Investor pres slides starting at slide 14 for specific metrics

https://investors.datadoghq.com/static-files/986ca4cd-9507-4c9d-b56f-4bae59d3dd47

 

I'll ask a specific example if i may - how do you calculate net new ACV for ServiceNow?

 

Bumping this thread, I’m resorting to this because I am so out of my depth in terms of modeling out a public software co that we are initiating coverage on (my team is not a software team). I’m looking at an old model and have no idea wtf is going on (3000 row bookings waterfall with fairly arbitrary split between booking types), would appreciate absolutely any help with resources other than SaaS CFO since that is more banker oriented rather than public Co’s.

 

Facilis ad ipsum quam corporis. Laudantium dicta et numquam eum. Est illo mollitia numquam consequuntur molestiae non sit tenetur. Vitae tempore ut voluptas aut blanditiis eaque. Temporibus hic voluptatem veritatis aut.

Architecto quibusdam minima provident qui placeat. Placeat atque ratione aspernatur voluptatibus quia eaque nesciunt. Animi doloremque laboriosam beatae beatae eum et. In sunt harum magnam animi ex nihil. Natus porro et est mollitia.

Career Advancement Opportunities

May 2024 Hedge Fund

  • Point72 98.9%
  • D.E. Shaw 97.9%
  • Citadel Investment Group 96.8%
  • Magnetar Capital 95.8%
  • AQR Capital Management 94.7%

Overall Employee Satisfaction

May 2024 Hedge Fund

  • Magnetar Capital 98.9%
  • D.E. Shaw 97.8%
  • Blackstone Group 96.8%
  • Two Sigma Investments 95.7%
  • Citadel Investment Group 94.6%

Professional Growth Opportunities

May 2024 Hedge Fund

  • AQR Capital Management 99.0%
  • Point72 97.9%
  • D.E. Shaw 96.9%
  • Magnetar Capital 95.8%
  • Citadel Investment Group 94.8%

Total Avg Compensation

May 2024 Hedge Fund

  • Portfolio Manager (9) $1,648
  • Vice President (23) $474
  • Director/MD (12) $423
  • NA (6) $322
  • 3rd+ Year Associate (24) $287
  • Manager (4) $282
  • Engineer/Quant (71) $274
  • 2nd Year Associate (30) $251
  • 1st Year Associate (73) $190
  • Analysts (225) $179
  • Intern/Summer Associate (23) $131
  • Junior Trader (5) $102
  • Intern/Summer Analyst (251) $85
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Secyh62's picture
Secyh62
99.0
3
BankonBanking's picture
BankonBanking
99.0
4
Betsy Massar's picture
Betsy Massar
99.0
5
GameTheory's picture
GameTheory
98.9
6
CompBanker's picture
CompBanker
98.9
7
kanon's picture
kanon
98.9
8
dosk17's picture
dosk17
98.9
9
Jamoldo's picture
Jamoldo
98.8
10
numi's picture
numi
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”