👋 Hi, it’s CJ Gustafson and welcome to Mostly Metrics, my weekly newsletter where I unpack how the world’s best CFOs and business experts use metrics to make better decisions.
As a CFO at a tech company, most of what I do translates into some impact on our topline, which we measure as ARR.
ARR is powerful because it’s essentially an annuity stream the company gets to count on, as long as they don’t churn the customer.
And that brings me to my first major point - why not all Revenue is equally valuable…
Not all revenue is created equal
Not to throw anyone under the bus specifically, but it’s the Wild West these days on FinTwit (that’s finance Twitter, for those not talking LTV to CAC on weekends). Pop in, and you’ll see online marketplaces calling their GMV “Revenue” and service-based businesses calling their one-time Revenue “ARR”. Your aunt’s quilt business does not fall under ARR.
So, let’s set the record straight.
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