Glossary
AI Finance Glossary
Plain-English definitions of AI, accounting, and SaaS-finance terms.
Categories
A
Activation Rate
Percentage of new users who complete a key action that predicts long-term retention.
Annual Contract Value
Average annualized revenue from a customer contract, excluding one-time fees.
Annual Recurring Revenue
The annualized value of all active recurring subscription contracts, the primary revenue metric for SaaS businesses.
Average Revenue Per User
The mean revenue generated from each customer or user account over a given period, measuring monetization efficiency.
C
Churn Rate
The percentage of customers or revenue lost within a given period due to cancellations or non-renewals.
Churned MRR
Monthly recurring revenue permanently lost when customers cancel their subscriptions.
Cohort Analysis
Tracking a group of customers acquired in the same period to measure retention and revenue trends over time.
Contraction MRR
Monthly recurring revenue lost from existing customers through downgrades or seat reductions.
Contraction Revenue
Recurring revenue lost from existing customers who downgrade their plan or reduce usage without fully canceling.
Customer Acquisition Cost
The total cost of acquiring a new paying customer, including all sales and marketing expenses divided by new customers acquired.
Customer Lifetime Value
The total net revenue a business expects to earn from a customer over the entire duration of their relationship.
D
Daily Active Users
The number of unique users who engage with a product on a given day, measuring habit formation and the depth of daily engagement.
Deferred Revenue
Cash received from customers for services not yet delivered, recorded as a liability until the service obligation is fulfilled.
Dunning
The process of systematically communicating with customers to collect overdue payments, through a sequence of increasingly urgent reminders.
E
Engagement Score
Composite metric quantifying how actively a customer uses a product, predicting retention and expansion.
Expansion MRR
Monthly recurring revenue added from existing customers through upsells, cross-sells, or seat additions.
Expansion Revenue
Additional recurring revenue generated from existing customers through upsells, cross-sells, or increased usage.
G
Gross Margin
The percentage of revenue remaining after subtracting the direct cost of goods sold, measuring production profitability.
Gross Revenue Retention
The percentage of recurring revenue retained from existing customers excluding any expansion, capped at 100%.
L
M
Magic Number
A SaaS sales efficiency metric measuring how much new ARR is generated for every dollar spent on sales and marketing.
Monthly Active Users
The number of unique users who engage with a product at least once within a 30-day period, measuring product reach and engagement.
Monthly Recurring Revenue
The normalized monthly value of all active recurring subscriptions, the operational pulse metric for SaaS businesses.
N
Net Revenue Retention
The percentage of recurring revenue retained from existing customers including expansions, showing whether a customer base grows on its own.
New MRR
Monthly recurring revenue generated from customers acquired for the first time in a given period.
P
Payback Period
Time required to recover the customer acquisition cost from a customer's gross profit contribution.
Payment Facilitator
Entity that aggregates merchant payment acceptance under a master account, enabling sub-merchant onboarding.
Payment Gateway
Software infrastructure that processes, verifies, and authorizes online and in-person payment transactions between merchants and customers.
Product Qualified Lead
A prospective customer who has demonstrated buying intent through meaningful engagement with a product — such as using a key feature or hitting a usage threshold.
S
SaaS Quick Ratio
A metric measuring SaaS revenue growth quality by comparing new and expansion MRR gained to churned and contracted MRR lost.
Sales Qualified Lead
A prospect that has been reviewed and confirmed by the sales team as meeting target criteria, ready for direct sales engagement.