Magic Number
Definizione
The magic number is a SaaS sales efficiency metric that divides the net new annual recurring revenue added in a quarter, annualized, by the sales and marketing spend of the prior quarter.
Come si presenta nel fundraising
A magic number above 1.0 signals the sales and marketing engine is generating more than a dollar of new ARR for every dollar spent the quarter before, which investors read as a green light to keep funding growth.
Domande frequenti
What magic number score do investors consider strong?
Above 0.75 is generally considered efficient enough to keep investing in sales and marketing, above 1.0 is strong, and below 0.5 usually signals the go-to-market motion needs work before scaling spend further.
Why does the magic number use the prior quarter's spend instead of the current one?
New sales and marketing spend typically takes a quarter or more to convert into signed revenue, so lagging the spend by one period gives a more accurate read on what that spend actually produced.
Risorse Round Funded
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