Board Metrics Glossary: 25 Definitions That Match
Most board metric disputes are not about performance, they are about definitions: a 'customer' counted differently in two spreadsheets, churn computed on logos in one tab and revenue in another, CAC with salaries in one quarter and without them the next. The fix is a definitions page, agreed once, a
Author: Yanni Papoutsis · Fractional VP of Finance and Strategy for early-stage startups · Author, Raise Ready
Published: 2026-06-10 · Last updated: 2026-06-10
Reading time: ~10 min
What Is Driver-Based Revenue Forecasting?
A revenue forecast is a projection of the money your business will earn over a defined future period. There are two ways to build one:
Top-down forecasting starts with the total addressable market and works down to a market share assumption: “The UK B2B software market is worth £10 billion. If we capture 0.1%, we generate £10 million in revenue.” Useful for sizing the opportunity, useless for operational planning. Investors have heard thousands of 0.1% market share projections and are rightly sceptical.
Bottom-up, driver-based forecasting starts with the specific activities that generate revenue: “We have capacity to run 20 outbound sales conversations per week. Our conversion rate is 10%. Our average contract value is £12,000 per year. That gives us 2 new customers per week, or roughly 100 new customers per year, generating £1.2 million in new ARR.” Every assumption in that chain is testable, improvable, and explainable.
Driver-based forecasting is also the input layer for your 3-statement model — your revenue drivers feed the income statement, which integrates with the balance sheet and cash flow statement.
Why a Revenue Forecast Startup Needs a Different Approach
Established businesses forecast revenue by extrapolating historical data. Startups do not have historical data. The entire forecast must be built on forward-looking assumptions rather than trend lines. A driver-based model built on transparent assumptions is actually more useful to an early-stage investor than a statistical extrapolation, because it makes the business logic explicit and discussable.
The Core Framework: Identify Your Revenue Drivers
Why Do Metric Definitions Need to Match Across Documents?
The direct answer: because investors triangulate. Your board deck, your model, and your data room will be read side by side during any raise, and a number that differs across them costs more credibility than a weak number reported consistently. Diligence teams rarely conclude "different methodology"; they conclude "sloppy" or worse. A single glossary page, versioned and dated, removes the entire class of problem. The definitions below follow the most widely used conventions; where practice genuinely varies, the variation is flagged so you can pick a side deliberately.
Revenue Metrics
1. MRR (Monthly Recurring Revenue). The normalized monthly value of all active recurring subscriptions. Excludes one-time fees, services, and non-recurring usage. Full treatment in our MRR vs ARR guide.
2. ARR (Annual Recurring Revenue). MRR x 12, or the annualized value of committed recurring contracts. State which basis you use; they diverge for usage-based revenue.
3. New MRR. Recurring revenue from customers with no prior active subscription in the period.
4. Expansion MRR. Incremental recurring revenue from existing customers: upgrades, seats, cross-sell, usage growth.
5. Contraction MRR. Reduction in recurring revenue from customers who remain active.
6. Churned MRR. The full recurring revenue of customers who cancelled in the period.
7. Net New MRR. New + expansion - contraction - churned. The single most useful monthly growth number.
8. ACV (Annual Contract Value). Average annualized value per customer contract, excluding one-time fees. Define whether it is per contract or per customer.
9. Bookings. Total contract value signed in the period, regardless of revenue recognition timing. Never interchangeable with revenue or ARR.
10. Revenue (GAAP). Recognized revenue under accounting rules, including non-recurring items. The audited anchor everything else must reconcile to.
Retention Metrics
11. GRR (Gross Revenue Retention). (Starting MRR - churn - contraction) / starting MRR for a fixed cohort over twelve months. Capped at 100%. See GRR vs NRR.
12. NRR / NDR (Net Revenue/Dollar Retention). Same cohort calculation with expansion added back. Above 100% means the base grows without new logos.
13. Logo Churn Rate. Customers lost / customers at period start. Counts every customer equally regardless of size.
14. Revenue Churn Rate. Churned MRR / starting MRR. The revenue-weighted counterpart; report both, per our churn guide.
15. Quick Ratio. (New + expansion MRR) / (churned + contraction MRR). Above 4 is the widely cited healthy threshold.
16. Cohort Retention. A cohort's revenue at month N as a percentage of its month-0 revenue, plotted over time. The curve shape underlies every blended retention figure.
Acquisition Efficiency Metrics
17. CAC (Customer Acquisition Cost). Fully loaded sales and marketing spend / new customers, with spend lagged by the sales cycle. Specify blended vs paid; they answer different questions.
18. CAC Payback Period. CAC / (monthly recurring gross profit per customer), in months. Use gross profit, not revenue. Benchmarks by channel in our payback period post.
19. LTV (Customer Lifetime Value). Average gross profit per customer per period / churn rate, or a cohort-based equivalent. Flag which method you use; assumptions swing it heavily.
20. LTV:CAC Ratio. Lifetime gross profit per customer over acquisition cost. The commonly cited healthy threshold is 3:1 or better.
21. Magic Number. Net new ARR in a quarter x 4 / prior quarter's sales and marketing spend. Roughly, above 0.75 supports scaling spend. Full walkthrough in our magic number guide.
Capital Efficiency Metrics
22. Gross Margin. (Revenue - cost of revenue) / revenue. For SaaS, include hosting, support, and customer success delivery in cost of revenue; state your allocation policy once.
23. Net Burn. Cash out minus cash in for the period, from the bank ledger, not the P&L.
24. Runway. Cash balance / average net burn, in months. Quote both current-burn and plan-burn versions; they differ whenever hiring is planned. Test scenarios in the runway and burn calculator.
25. Burn Multiple and Rule of 40. Burn multiple: net burn / net new ARR, with under 1.5x generally considered good at growth stage. Rule of 40: revenue growth rate + profit margin, with 40+ the benchmark. Definitions and stage benchmarks in our Rule of 40 guide.
How Do You Keep Definitions Consistent in Practice?
Three habits do the work. First, put the glossary in your financial model itself, as a definitions tab that the model's formulas visibly implement; the model becomes the single source of truth and the deck quotes it. Second, version the glossary: if you change a definition (say, moving customer success from opex to cost of revenue), restate prior periods and note the change in the next board deck rather than letting the series silently break. Third, assign an owner, usually whoever builds the board deck, with the explicit job of refusing any metric into the deck that does not match the definitions tab.
Where Do Definitions Most Often Diverge, and Which Side Should You Pick?
Five definitions account for most of the disputes we see in real board decks, and each has a defensible default.
Customer count. Does a customer with three subsidiaries on separate contracts count once or three times? Default: count paying entities for revenue metrics and parent organizations for logo metrics, and say so. This choice silently changes ACV, logo churn, and CAC all at once.
Churn timing. Is a customer churned when they give notice, when the contract ends, or when access is cut? Default: at contract end, since that is when revenue actually stops. Notice-based churn recognizes losses early, which is conservative but breaks reconciliation with the MRR ledger.
CAC loading. Media-only, marketing-department-only, or fully loaded with sales salaries and commissions? Default: fully loaded, lagged by the sales cycle. It produces the largest and least flattering number, which is exactly why it is the credible one.
ARR for usage-based revenue. Annualizing last month's usage produces a volatile ARR that can swing ten percent month to month. Default: annualize trailing three-month average usage, disclose the method, and never switch methods in a quarter where it helps you.
Gross margin boundaries. Whether customer success sits in cost of revenue or opex can move SaaS gross margin by several points. Default: success staff who deliver the service (onboarding, support) in cost of revenue; success staff who sell expansion in sales cost. Draw the line once, document it, restate history if you ever move it.
None of these defaults is sacred. What is sacred is that the choice is written down, applied everywhere, and stable over time, because the metric series only means something if its definition holds still.
Frequently Asked Questions
Do investors really check definition consistency? Yes, routinely. Recomputing your metrics from raw data is a standard diligence step, and mismatches between deck, model, and data room are among the most common findings.
Should I use these exact definitions or my own? Start from standard definitions and amend only with reason. Every nonstandard definition is a conversation you will have in every diligence process; make sure the amendment earns its cost.
How many metrics belong in a board deck? Fewer than 25. The glossary defines the vocabulary; a good deck leads with the 6-10 metrics that matter for your stage and motion, with the rest available in an appendix.
What if two investors ask for different methodologies? Report your standard definition and provide the variant as a supplementary calculation. Never fork your primary reporting per audience; that is how series breaks and credibility problems start.
When should a startup adopt formal definitions? The first time any metric appears in front of an investor. Retrofitting definitions after two years of inconsistent decks is far more painful than starting clean at pre-seed.
Model your metrics with Raise Ready's free financial model tool. Implement every definition on this page in a consistent startup financial model and keep burn and runway numbers board-ready with the runway and burn calculator.
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