Growth Equity

Quality Assessment

Revenue QualityARR ConsistencyEBITDA ValidationCash Flow AccuracyDeferred Revenue Check

Revenue Quality Bridge: Ending ARR driven by New Logo and Expansion ARR, offset by Churn/Contraction.

Working Capital Narrative: Accounts receivable and deferred revenue movements analyzed for cash conversion efficiency.

Data Confidence Rating: High – all core metrics reconciled and verified.

Metric	2023 A	2024 A	2025 A	2026 P
GAAP Revenue	$12,500,000	$18,750,000	$26,500,000	$33,000,000
EBITDA	$1,300,000	$2,200,000	$4,200,000	$6,500,000
Ending ARR	$13,500,000	$19,000,000	$26,000,000	$35,500,000
NRR	95%	100%	106%	108%
GRR	75%	78%	81%	84%
Rule of 40	5%	12%	22%	28%

Metric	Definition	Formula/Source	Inclusion/Exclusion	Common Pitfalls
Revenue (GAAP)	Recognized per ASC 606; B2B SaaS contracts.	GL: Revenue accounts 4000-4999	Include: Subscription, professional services. Exclude: Partner commissions, taxes	Pitfall: Do not recognize full contract value upfront; only earned portion per period
ARR	Annualized recurring revenue; normalized for term and minimums.	CRM: Subscription value × 12 ÷ contract months	Include: Recurring subscription fees. Exclude: One-time setup, usage overages	Pitfall: Multi-year deals must be normalized to annual run-rate, not total contract value
Billings	Invoices issued; excludes taxes/non-customer cash.	Billing System: Invoice totals (pre-tax)	Include: Customer invoices. Exclude: Sales tax, VAT, refunds, credits	Pitfall: Billings ≠ Revenue; timing differs based on payment terms and recognition
Deferred Revenue	Prepaid customer revenue; key SaaS control.	GL: Liability account 2400	Include: Prepaid subscriptions not yet earned. Exclude: Accounts payable, accrued expenses	Pitfall: Should decrease as revenue is recognized; sudden drops may indicate recognition issues
Cash Receipts	Collections excluding financing/refunds.	Bank statements + AR reconciliation	Include: Customer payments. Exclude: Financing proceeds, refunds, inter-company transfers	Pitfall: Operating cash only; do not mix with debt proceeds or equity raises (financing cash)

All definitions audited from a $1bn team of growth equity enterprise software experts.

Metric	2023 A	2024 A	2025 A	2026 P
Revenue (GAAP)	$12,500,000	$18,750,000	$26,500,000	$33,000,000
COGS	$3,200,000	$4,800,000	$6,400,000	$7,800,000
Gross Profit	$9,300,000	$13,950,000	$20,100,000	$25,200,000
S&M Expense	$4,500,000	$6,750,000	$9,500,000	$11,200,000
R&D Expense	$2,000,000	$2,800,000	$3,500,000	$4,200,000
G&A Expense	$1,500,000	$2,200,000	$2,900,000	$3,300,000
EBITDA	$1,300,000	$2,200,000	$4,200,000	$6,500,000

Metric	2023 A	2024 A	2025 A	2026 P
Beginning ARR	$10,000,000	$13,500,000	$18,000,000	$24,500,000
New Logo ARR	$4,000,000	$5,500,000	$7,000,000	$9,000,000
Expansion ARR	$2,000,000	$3,000,000	$4,500,000	$6,000,000
Churn ARR	($1,500,000)	($1,800,000)	($2,000,000)	($2,300,000)
Contraction ARR	($1,000,000)	($1,200,000)	($1,500,000)	($1,700,000)
Ending ARR	$13,500,000	$19,000,000	$26,000,000	$35,500,000
GRR	75%	78%	81%	84%
NRR	95%	100%	106%	108%

Metric	2023 A	2024 A	2025 A	2026 P
Beginning Deferred Revenue	$3,500,000	$4,800,000	$6,000,000	$7,700,000
Billings	$7,000,000	$9,000,000	$12,500,000	$15,000,000
Revenue Recognized	$5,700,000	$7,800,000	$10,500,000	$13,200,000
Ending Deferred Revenue	$4,800,000	$6,000,000	$8,000,000	$9,500,000

Metric	2023 A	2024 A	2025 A	2026 P
Cash Receipts	$11,500,000	$16,800,000	$24,000,000	$30,500,000
Δ Accounts Receivable	($500,000)	($600,000)	($800,000)	($900,000)
Δ Deferred Revenue	$1,300,000	$1,200,000	$2,000,000	$2,400,000
Revenue (GAAP)	$12,500,000	$18,750,000	$26,500,000	$33,000,000

Metric	2023 A	2024 A	2025 A	2026 P
Revenue > 0	PASS	PASS	PASS	PASS
EBITDA >= 0	PASS	PASS	PASS	PASS
Ending ARR consistent	PASS	PASS	PASS	PASS

Metric	2023 A	2024 A	2025 A	2026 P
NRR >= 90%	PASS	PASS	PASS	PASS
Rule of 40 >= 40%	FAIL	FAIL	FAIL	FAIL
Ending ARR growth >=10%	FAIL	PASS	PASS	PASS