SaaS Magic Number Calculator
Calculate annualized quarter-over-quarter ARR increase divided by prior-quarter sales and marketing spend.
Use the same currency for all values and the same ARR basis across adjacent quarters. Prior-quarter sales and marketing spend must be positive. No benchmark or threshold is applied.
Manual inputs stay in this browser. No external data is fetched.
Sources: Bessemer Venture Partners, SaaS Metrics 2.0
Result
A QUICK WALKTHROUGH
How to use this tool
- Use the same currency for all values and the same ARR basis across adjacent quarters. Prior-quarter sales and marketing spend must be positive. No benchmark or threshold is applied.
- Magic Number = (current-quarter ARR − prior-quarter ARR) × 4 ÷ prior-quarter sales and marketing spend.
- Manual inputs stay in this browser. No external data is fetched.
Formula
Magic Number = (current-quarter ARR − prior-quarter ARR) × 4 ÷ prior-quarter sales and marketing spend.
Assumptions and limits
Use the same currency for all values and the same ARR basis across adjacent quarters. Prior-quarter sales and marketing spend must be positive. No benchmark or threshold is applied.
Sources
Bessemer Venture Partners, SaaS Metrics 2.0
GOOD TO KNOW
Common questions
Why is the ARR increase multiplied by four?
The formula annualizes one quarter of ARR growth by multiplying it by four, then divides by sales and marketing spend from the preceding quarter.
Which ARR values and expenses should I compare?
Use ARR measured on the same basis at two adjacent quarter ends, and the sales and marketing spend from the earlier quarter. Keep all amounts in one currency.
Does a higher Magic Number guarantee efficient growth?
No. This is a ratio with no built-in benchmark or threshold; it does not include other costs or establish causation. Interpret it alongside your company’s operating metrics.