SaaS Burn Multiple Calculator
Compute SaaS burn multiple by dividing net burn by net new ARR, with optional monthly period normalization for comparable reporting.
For planning and benchmarking only. Align ARR policy and cash-flow definitions with your finance team before board reporting.
Examples
- Net burn $2,400,000.00, net new ARR $1,200,000.00, period 3 months => Burn multiple: 2.00x with annualized burn of $9,600,000.00 and annualized net new ARR of $4,800,000.00.
- Net burn $750,000.00, net new ARR $900,000.00, period left blank (default 3 months) => Burn multiple: 0.83x with annualized burn of $3,000,000.00 and annualized net new ARR of $3,600,000.00.
FAQ
What is a good burn multiple for SaaS?
Context matters, but lower is generally better because it means less cash burned per dollar of ARR growth.
Can burn multiple be negative?
If net burn is negative (net cash generation), the ratio can be negative. That usually indicates the business is cash-flow positive while still growing ARR.
Should I use GAAP revenue instead of ARR?
For this metric, use net new ARR because burn multiple is designed to connect cash consumption to recurring revenue growth capacity.
Additional Information
- Burn multiple is unitless and should be evaluated over consistent reporting periods.
- Optional period length defaults to 3 months so quarterly and non-quarterly reporting can be normalized.
- Use net new ARR definitions that include new, expansion, contraction, and churn to avoid overstating efficiency.