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SaaS quick ratio and MRR projection

Is your recurring revenue growing efficiently, or are you filling a leaky bucket? Enter one month of MRR movements to get the quick ratio, net new MRR, NRR and GRR, then project MRR 12 or 24 months ahead with your own growth and churn assumptions.

● Free, no sign-upUpdated: September 16, 2026

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Quick ratio—

Net new MRR—

MRR growth—

NRR—

GRR—

MRR at horizon—

MRR waterfall for the month

Projected MRRconstant rates

MRR with new customersexisting base only

Model. Expansion and losses are fixed shares of last month’s MRR; new MRR grows at a constant rate. Real businesses see seasonality and churn that changes with customer age, so read the projection as a direction, not a forecast.

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How to use it

Take one month of MRRFrom your billing or analytics tool: MRR at the start of the month and the four movements — new, expansion, contraction and churned.
Read the ratioThe quick ratio compares revenue gained with revenue lost. NRR and GRR show how the existing base behaves on its own.
Set assumptionsChoose a 12 or 24-month horizon and how fast new MRR grows. Override expansion or churn to test a retention improvement.
Compare the curvesThe solid curve is MRR with new customers; the dashed one is what the current base would do alone. Hover for monthly details.

SaaS quick ratio formula

The SaaS quick ratio measures growth efficiency: how many dollars of recurring revenue you add for every dollar you lose. The metric was popularized by investor Mamoon Hamid as a quick way to tell healthy growth from growth that is constantly refilling a leaky bucket.

Quick ratio = (new MRR + expansion MRR) / (contraction MRR + churned MRR) Net new MRR = new + expansion − contraction − churned MRR growth = net new MRR / MRR at the start of the month

Example: MRR of $50,000 at the start of the month, $6,000 new, $1,500 expansion, $500 contraction and $2,000 churned. Revenue gained is $7,500, revenue lost is $2,500, so the quick ratio is 3 and net new MRR is $5,000, or 10% growth.

A ratio below 1 means MRR is shrinking. Between 1 and 2, the company grows but spends much of its acquisition effort replacing lost revenue. Around 4 is the level commonly cited as strong for early-stage SaaS. Mature companies usually have lower ratios: the larger the base, the more revenue churns in absolute terms, even at the same churn rate.

Net and gross revenue retention

GRR = (start MRR − contraction − churned) / start MRR NRR = (start MRR + expansion − contraction − churned) / start MRR

Retention metrics ignore new customers and show what the existing base does on its own. GRR cannot exceed 100%; NRR can, when expansion outweighs losses. In the example GRR is 95% and NRR is 98% per month. Many teams report these annually, over a 12-month cohort, which is a different number from compounding a single month.

How the MRR projection works

The projection keeps the structure of your month and rolls it forward. Expansion and losses are proportional to last month’s MRR; new MRR starts at this month’s value and grows at the rate you set.

new_t = new MRR · (1 + g)^(t − 1) MRR_t = MRR_(t−1) · (1 + e − l) + new_t e = expansion / start MRR, l = (contraction + churned) / start MRR Ceiling = new MRR / (l − e) with g = 0 and l > e

The ceiling is the most useful number in the model. If new MRR stays flat, revenue stops growing at the level where monthly losses equal what new customers bring: in the example, $6,000 / (5% − 3%) = $300,000. Doubling acquisition doubles the ceiling; halving the net loss rate does the same, and usually costs less. The dashed curve on the chart shows the existing base without any new customers, which makes the cost of churn visible.

Limitations

Constant rates. Real churn is higher for young customers and lower for mature ones; a fast-growing base of new customers usually churns more than the model assumes.
One month is noisy. A large downgrade or a single enterprise deal moves the ratio a lot. Average three months or compare quarter over quarter.
No reactivations. Returning customers are new MRR here; some teams track reactivation separately.

How to improve the quick ratio

The ratio has two sides, and the cheaper one to move is usually the denominator.

Reduce early churn. Customers who never reach value in their first weeks cancel first. A better first-run experience lowers churned MRR without any extra acquisition spend.
Prevent contraction. Downgrades often follow low adoption: teams pay for seats nobody uses. Adoption campaigns inside the product protect revenue before renewal.
Build expansion paths. Seat-based pricing, usage tiers and add-ons that customers discover in the product raise expansion MRR and push NRR above 100%.
Grow new MRR efficiently. Watch acquisition payback alongside the ratio; the CAC payback calculator shows how long new revenue takes to repay its cost.

For customer-level churn and lifetime value, use the LTV and CAC calculator; to see which cohorts stay, the retention cohort calculator.

Sources

The SaaS quick ratio as popularized by investor Mamoon Hamid; the benchmark of about 4 for early-stage companies is a widely repeated rule of thumb rather than a study result.
Skok D. SaaS Metrics 2.0 — A Guide to Measuring and Improving What Matters. forEntrepreneurs.com — MRR movements, expansion and net negative churn.

FAQ

What is the SaaS quick ratio?

It is revenue gained divided by revenue lost in a period: (new MRR + expansion MRR) / (contraction MRR + churned MRR). A ratio of 3 means you add three dollars of recurring revenue for every dollar that churns or downgrades.

What is a good SaaS quick ratio?

Around 4 is the benchmark commonly cited for early-stage SaaS. Below 1 means MRR is shrinking, and between 1 and 2 growth is expensive because much of it replaces lost revenue. Mature companies usually have lower ratios, since absolute churn grows with the base.

How is NRR different from the quick ratio?

NRR looks only at existing customers: start MRR plus expansion minus contraction and churn, divided by start MRR. The quick ratio includes new customers. A company can have a good quick ratio thanks to heavy acquisition while its NRR shows the base is shrinking.

Should I use monthly or annual numbers?

Monthly numbers react faster but are noisy, especially with few customers. Averaging three months or calculating the ratio per quarter gives a more stable picture. Use the same period for all four movements.

Where do reactivated customers go?

In this calculator, count them as new MRR. If reactivations are significant, track them separately, because they behave differently from truly new customers.

Why does the projection level off?

Losses are a percentage of MRR, while new MRR is an amount. As MRR grows, losses grow with it until they equal new plus expansion revenue. Growing new MRR or lowering the net loss rate raises that ceiling.