SaaS Magic Number

The SaaS magic number measures sales efficiency: net new annualized revenue in a quarter, divided by sales and marketing spend from the prior quarter. A number above 0.75 is generally read as a signal to keep investing in growth; below that, efficiency is the more urgent problem.

Like the Rule of 40, it’s built from two inputs that need to agree with the ledger (new recurring revenue and S&M spend), not with whatever the CRM or the budget says they should be. See the SaaS metrics an AI can actually get right.