{ "standard": "SoF Standard Definitions", "edition": "Customer revenue metrics", "version": "1.0", "stamp": "sof-v1.0", "versionDate": "2026-09-18", "url": "https://www.strategyoffinance.com/standards/", "license": "Free to adopt and cite with attribution to Strategy of Finance.", "groups": [ { "id": "foundations", "label": "Foundations" }, { "id": "movement", "label": "Movement and retention" }, { "id": "structure", "label": "Structure and quality" } ], "terms": [ { "slug": "the-measured-unit", "order": 1, "group": "foundations", "title": "Customer — the measured unit", "shortName": null, "url": "https://www.strategyoffinance.com/standards/the-measured-unit/", "standard": "Every customer metric is measured on the resolved parent entity — the commercial relationship — not on the billing identifier that happens to appear in the revenue file. Comped and 100%-free customers are excluded from revenue and logo metrics alike.", "plain": "A customer is the commercial relationship, resolved from its billing accounts, and only paying customers are counted.", "summary": "Every customer metric is measured on the resolved parent entity, not the billing identifier. Comped customers are excluded from revenue and logo metrics alike.", "reviewed": "2026-09-18", "glance": { "formula": "customer = the resolved parent entity behind one or more billing identifiers", "unit": "count (logos)", "bounded": "n/a", "defaults": "comped excluded (locked) · related-party flagged, not excluded", "lever": "Where the parent boundary is drawn — one relationship read as four accounts inflates logo churn and new business at once", "readWith": [ "concentration", "acv-and-arpa" ], "appearsIn": [ "Logo counts", "Data-room customer list", "Concentration schedule" ] }, "stateIt": { "template": "{N} customers (SoF Standard v1.0: resolved parent entities · comped excluded · related-party flagged)", "checks": [ "Identifiers mapped to parents, and the mapping versioned?", "Comped and $0 customers excluded from counts and revenue?", "Related-party customers flagged?", "The same customer count used in ARPA, concentration and churn?" ] }, "exampleCsv": "https://www.strategyoffinance.com/standards/examples/the-measured-unit.csv", "aliases": [ "Customer definition", "Entity resolution", "Resolved parent entity" ], "topics": [ "ma", "modern-finance-function" ], "related": [ "revenue-types", "monthly-recurring-revenue", "concentration" ], "configKeys": [ { "key": "exclude_comped", "default": "true", "locked": true, "note": null } ], "configNote": null }, { "slug": "revenue-types", "order": 2, "group": "foundations", "title": "Revenue types", "shortName": null, "url": "https://www.strategyoffinance.com/standards/revenue-types/", "standard": "Every revenue line carries exactly one type from a closed seven-value enumeration. Only recurringsubscription contributes to MRR. A line whose type cannot be determined is not guessed — the computation stops, or the type is resolved by a person and the resolution is logged.", "plain": "Only committed subscription revenue is recurring. Usage, services and one-time fees are real revenue, but never MRR.", "summary": "Every revenue line carries one of seven locked types. Only recurring subscription revenue becomes MRR; a type that cannot be determined is never guessed.", "reviewed": "2026-09-18", "glance": { "formula": "MRR = Σ lines typed recurring_subscription; every other type stays out", "unit": "classification (7 types)", "bounded": "closed enumeration", "defaults": "7 locked types · a file with no type column stops and asks", "lever": "Typing usage or services as recurring — the worked example's ARR moves from 72,000 to 120,000", "readWith": [ "monthly-recurring-revenue", "annual-recurring-revenue", "net-revenue-retention" ], "appearsIn": [ "ARR build", "Revenue schedule", "Tie-out" ] }, "stateIt": { "template": "Recurring revenue {x} (SoF Standard v1.0: recurring_subscription only · usage included in retention, excluded from MRR · credits typed, not netted)", "checks": [ "Every line carries exactly one type?", "Services and one-time fees excluded from MRR?", "Usage typed separately, with its retention treatment stated?", "Credits and refunds typed, not netted into subscription?" ] }, "exampleCsv": "https://www.strategyoffinance.com/standards/examples/revenue-types.csv", "aliases": [ "Revenue classification", "Recurring vs non-recurring revenue" ], "topics": [ "fpa", "ma" ], "related": [ "monthly-recurring-revenue", "annual-recurring-revenue", "net-revenue-retention", "the-register" ], "configKeys": [], "configNote": "Enumeration (LOCKED): recurringsubscription · usage · services · onetime · transactional · creditrefund · othernonrecurring" }, { "slug": "monthly-recurring-revenue", "order": 3, "group": "foundations", "title": "Monthly recurring revenue", "shortName": "MRR", "url": "https://www.strategyoffinance.com/standards/monthly-recurring-revenue/", "standard": "MRR is the month-end recurring run rate of a resolved customer: subscription revenue normalized to a monthly rate, held through qualifying pauses, stated in base currency. It is a state, not a flow — and it is deliberately not the same number as recognized revenue.", "plain": "MRR is what a customer's subscription pays per month, taken at month end, if nothing changes.", "summary": "MRR is the month-end recurring run rate of a resolved customer: a state, not a flow, held through qualifying pauses and distinct from recognized revenue.", "reviewed": "2026-09-18", "glance": { "formula": "MRR = the month-end recurring rate, normalized to monthly, held through qualifying pauses", "unit": "currency per month", "bounded": "≥ 0", "defaults": "3-month reactivation window · comped excluded (locked) · monthly-average FX", "lever": "Reading an ARR-basis export as monthly — overstates MRR twelvefold", "readWith": [ "annual-recurring-revenue", "revenue-types", "revenue-tie-out" ], "appearsIn": [ "MRR build", "Board deck", "MRR bridge" ] }, "stateIt": { "template": "MRR {x} (SoF Standard v1.0: month-end run rate · subscription only · 3-month pause window)", "checks": [ "Amount basis and period grain declared, not inferred?", "Annual invoices normalized to monthly, not spiked?", "Month-end rate used for mid-month changes?", "Pauses within the window held, and logged?" ] }, "exampleCsv": "https://www.strategyoffinance.com/standards/examples/monthly-recurring-revenue.csv", "aliases": [ "MRR", "Recurring run rate" ], "topics": [ "fpa", "modern-finance-function" ], "related": [ "revenue-types", "annual-recurring-revenue", "pause-vs-churn", "revenue-tie-out" ], "configKeys": [ { "key": "reactivation_window_months", "default": "3", "locked": false, "note": null }, { "key": "exclude_comped", "default": "true", "locked": true, "note": null } ], "configNote": null }, { "slug": "annual-recurring-revenue", "order": 4, "group": "foundations", "title": "Annual recurring revenue", "shortName": "ARR", "url": "https://www.strategyoffinance.com/standards/annual-recurring-revenue/", "standard": "ARR is in-month MRR × 12. It is a restatement of the current run rate, not a forecast, not a sum of the trailing twelve months, and not the value of the contract book.", "plain": "ARR is this month's MRR times twelve: a run rate, not a forecast and not last year's revenue.", "summary": "ARR is in-month MRR multiplied by twelve: a restatement of the current run rate, not a forecast, not trailing revenue, and not the value of the contract book.", "reviewed": "2026-09-18", "glance": { "formula": "ARR = MRR × 12", "unit": "currency per year", "bounded": "≥ 0", "defaults": "run_rate basis · committed ARR and contracted-not-yet-live reported separately", "lever": "Adding signed-but-unreached ramp steps or not-yet-live contracts — 120,000 becomes 204,000 in the worked example", "readWith": [ "monthly-recurring-revenue", "revenue-tie-out", "concentration" ], "appearsIn": [ "Headline metric", "Valuation multiple", "Covenant" ] }, "stateIt": { "template": "ARR {x} (SoF Standard v1.0: run-rate · MRR × 12 · usage excluded · net of discounts)", "checks": [ "Run-rate, not committed or contracted-not-yet-live?", "Usage excluded, or the figure labelled usage-inclusive?", "The month chosen sits on the trend, not a peak?", "Net of discounts?" ] }, "exampleCsv": "https://www.strategyoffinance.com/standards/examples/annual-recurring-revenue.csv", "aliases": [ "ARR", "Run-rate ARR", "Committed ARR", "Contracted not yet live" ], "topics": [ "fpa", "ipo-readiness" ], "related": [ "monthly-recurring-revenue", "revenue-types", "revenue-tie-out", "concentration" ], "configKeys": [ { "key": "arr_basis", "default": "run_rate", "locked": false, "note": "alternative contractacv" } ], "configNote": null }, { "slug": "movement-taxonomy", "order": 5, "group": "movement", "title": "The movement taxonomy", "shortName": null, "url": "https://www.strategyoffinance.com/standards/movement-taxonomy/", "standard": "Every month-over-month change in a customer's MRR is classified as exactly one of five movements — new, expansion, contraction, churn, reactivation — signed so that opening MRR plus all movements equals closing MRR, by construction.", "plain": "Every change in a customer's MRR is exactly one of five movements, and they add up to the closing balance without a plug.", "summary": "Every month-over-month change in a customer’s MRR is exactly one of five movements, signed so that opening plus movements equals closing by construction.", "reviewed": "2026-09-18", "glance": { "formula": "closing = opening + new + expansion + reactivation + contraction + churn", "unit": "currency per month", "bounded": "identity holds exactly", "defaults": "5 locked types · net per customer-month · sub-tags cross_sell, ramp_step, fx_driven", "lever": "The reactivation window — decides whether a gap is a pause or a churn-and-reactivation pair", "readWith": [ "pause-vs-churn", "growth-accounting", "foreign-exchange" ], "appearsIn": [ "MRR bridge", "Board deck", "Growth accounting" ] }, "stateIt": { "template": "Bridge {opening} → {closing} (SoF Standard v1.0: five movements · net per customer · reactivation separate from new)", "checks": [ "Opening + movements = closing exactly, with no reconciling line?", "Reactivation shown separately from new?", "Contraction shown separately from churn?", "FX-driven movements sub-totalled?" ] }, "exampleCsv": "https://www.strategyoffinance.com/standards/examples/movement-taxonomy.csv", "aliases": [ "MRR bridge", "Revenue bridge", "MRR movements", "New, expansion, contraction, churn, reactivation" ], "topics": [ "fpa" ], "related": [ "pause-vs-churn", "growth-accounting", "foreign-exchange" ], "configKeys": [], "configNote": "Movement types (LOCKED): new · expansion · contraction · churn · reactivation" }, { "slug": "pause-vs-churn", "order": 6, "group": "movement", "title": "Pause, churn, and the reactivation window", "shortName": null, "url": "https://www.strategyoffinance.com/standards/pause-vs-churn/", "standard": "A completed billing gap no longer than the reactivation window is a pause: MRR is held at the pre-gap level and no movements are recorded. A completed gap longer than the window is churn at the gap start, reactivation on return. A gap still open at the data cutoff is right-censored and governed separately.", "plain": "A short billing gap that closes is a pause. A long one is churn and a win-back. A gap still open at the cutoff is judged separately.", "summary": "A billing gap within the reactivation window is a pause with MRR held; a longer gap is churn then reactivation; an open gap at the cutoff is right-censored.", "reviewed": "2026-09-18", "glance": { "formula": "gap within the window → pause, MRR held · gap beyond the window → churn at the gap start, reactivation on return · gap open at the cutoff → trailing-gap policy", "unit": "months", "bounded": "n/a", "defaults": "reactivation_window_months = 3 · trailing_gap_policy = churn_at_gap_start", "lever": "The window — lengthening it converts churn-and-return pairs into pauses and lifts retention by construction", "readWith": [ "monthly-recurring-revenue", "churn-analytics", "the-register" ], "appearsIn": [ "Churn schedule", "Retention basis", "Register" ] }, "stateIt": { "template": "Churn recognized under a 3-month reactivation window; gaps open at the cutoff treated as churn (SoF Standard v1.0)", "checks": [ "Window stated, and no longer than the billing cycle it absorbs?", "Right-censored customers listed by name?", "Pauses logged as assumptions with the held amount?", "The same window used in MRR, churn and NRR?" ] }, "exampleCsv": "https://www.strategyoffinance.com/standards/examples/pause-vs-churn.csv", "aliases": [ "Reactivation window", "Win-back", "Billing gap treatment", "Right-censored churn" ], "topics": [ "fpa", "ma" ], "related": [ "monthly-recurring-revenue", "movement-taxonomy", "churn-analytics", "the-register" ], "configKeys": [ { "key": "reactivation_window_months", "default": "3", "locked": false, "note": null }, { "key": "trailing_gap_policy", "default": "churn_at_gap_start", "locked": false, "note": "alternative holdaspaused" } ], "configNote": null }, { "slug": "net-revenue-retention", "order": 7, "group": "movement", "title": "Net revenue retention", "shortName": "NRR", "url": "https://www.strategyoffinance.com/standards/net-revenue-retention/", "standard": "NRR measures what a fixed set of customers is worth now versus what it was worth then, expansion included and new customers excluded. The SoF default is the monthly-cohort compounded trailing twelve months, usage-inclusive and reactivation-inclusive. Two alternative variants are defined, and all three are reported.", "plain": "NRR asks what last year's customers are worth this year, expansion included and new customers excluded.", "summary": "NRR measures what a fixed set of customers is worth now versus then, expansion included and new customers excluded. Three variants defined, all three computed.", "reviewed": "2026-09-18", "glance": { "formula": "TTM compounded = product of twelve monthly ratios, each = Σ revenue this month of customers active last month ÷ Σ their revenue last month", "unit": "%", "bounded": "no ceiling · 100% = base flat", "defaults": "ttm_compounded · usage-inclusive (locked) · reactivation-inclusive · no smoothing", "lever": "Usage inclusion — 14 points in the sensitivity example", "readWith": [ "gross-revenue-retention", "cohort-retention", "definitional-sensitivity" ], "appearsIn": [ "Board deck", "S-1 and 10-K", "Data room", "Valuation" ] }, "stateIt": { "template": "NRR {x}% (SoF Standard v1.0: TTM compounded · usage-inclusive · reactivation-inclusive · 3-month window)", "checks": [ "Base fixed at the start, new customers excluded?", "Variant named?", "Usage treatment stated?", "Reactivation treatment stated?", "Read with GRR and logo retention?" ] }, "exampleCsv": "https://www.strategyoffinance.com/standards/examples/net-revenue-retention.csv", "aliases": [ "NRR", "Net dollar retention", "NDR", "Net revenue retention rate" ], "topics": [ "fpa", "ipo-readiness", "capital-allocation" ], "related": [ "gross-revenue-retention", "cohort-retention", "definitional-sensitivity", "revenue-types" ], "configKeys": [ { "key": "nrr.default_variant", "default": "ttm_compounded", "locked": false, "note": "alternatives yoysnapshot, quarterlyannualized" }, { "key": "nrr.usage_inclusive", "default": "true", "locked": true, "note": null }, { "key": "nrr.reactivation_inclusive", "default": "true", "locked": false, "note": null }, { "key": "nrr.usage_smoothing", "default": "none", "locked": false, "note": "trailing-three-month smoothing available, never default" } ], "configNote": null }, { "slug": "gross-revenue-retention", "order": 8, "group": "movement", "title": "Gross revenue retention", "shortName": "GRR", "url": "https://www.strategyoffinance.com/standards/gross-revenue-retention/", "standard": "GRR measures the same fixed customer base as NRR, with each customer capped at its own starting revenue. Expansion cannot offset loss. GRR is therefore bounded above by 100% and is computed under the same three variants as NRR.", "plain": "GRR is NRR with every customer capped at what it paid at the start, so growth cannot hide leakage.", "summary": "GRR measures the same fixed base as NRR with each customer capped at its starting revenue, so expansion cannot offset loss and the figure cannot exceed 100%.", "reviewed": "2026-09-18", "glance": { "formula": "GRR = Σ min(revenue now, revenue at base) ÷ Σ revenue at base — the cap applied per customer", "unit": "%", "bounded": "≤ 100% by construction", "defaults": "same as NRR · cap applied per customer", "lever": "Capping the aggregate instead of each customer — lets one account's expansion mask another's contraction", "readWith": [ "net-revenue-retention", "cohort-retention", "churn-analytics" ], "appearsIn": [ "Board deck", "Diligence", "Lender reporting" ] }, "stateIt": { "template": "GRR {x}% (SoF Standard v1.0: per-customer cap · TTM compounded · usage-inclusive)", "checks": [ "Never above 100%?", "Cap applied per customer, not to the total?", "Same base, window and basis as the NRR beside it?", "Gap to NRR read as the base's expansion rate?" ] }, "exampleCsv": "https://www.strategyoffinance.com/standards/examples/gross-revenue-retention.csv", "aliases": [ "GRR", "Gross dollar retention", "GDR" ], "topics": [ "fpa", "ipo-readiness" ], "related": [ "net-revenue-retention", "cohort-retention", "churn-analytics" ], "configKeys": [], "configNote": "Identical to net revenue retention — the only difference is the per-customer cap." }, { "slug": "cohort-retention", "order": 9, "group": "movement", "title": "Cohort retention", "shortName": null, "url": "https://www.strategyoffinance.com/standards/cohort-retention/", "standard": "A cohort is the set of customers whose first month with MRR above zero falls in a given period. Each member's base is its MRR in its own joining month; each cell measures the cohort at the last month of the period being reported, clamped to the data cutoff. Cohort triangles use an MRR-only basis: usage is excluded by design.", "plain": "Cohort retention follows each vintage of customers on its own curve, measured at the end of each period against what they paid when they joined.", "summary": "A cohort is the set of customers whose first MRR month falls in a period. Each member’s base is its own joining month; each cell is measured at period end.", "reviewed": "2026-09-18", "glance": { "formula": "cell = Σ cohort MRR at the period end ÷ Σ cohort MRR in the joining month — net, gross-capped, and by logo", "unit": "%", "bounded": "gross ≤ 100% · net has no ceiling", "defaults": "cohort = first MRR month · MRR-only basis (usage excluded) · period-end anchoring · comped excluded (locked)", "lever": "Anchoring at the period start — an 80-point artifact in the worked example", "readWith": [ "net-revenue-retention", "gross-revenue-retention", "churn-analytics" ], "appearsIn": [ "Data-room cohort file", "Board deck", "Product-market-fit narrative" ] }, "stateIt": { "template": "Cohort retention, {granularity} (SoF Standard v1.0: cohorts by first MRR month · period-end cells · MRR-only basis)", "checks": [ "Read down columns, same age?", "Immature cohorts flagged?", "Base sizes shown beside the percentages?", "Usage exclusion stated?" ] }, "exampleCsv": "https://www.strategyoffinance.com/standards/examples/cohort-retention.csv", "aliases": [ "Cohort analysis", "Retention triangle", "Vintage retention", "Logo retention" ], "topics": [ "fpa", "capital-allocation" ], "related": [ "net-revenue-retention", "gross-revenue-retention", "churn-analytics" ], "configKeys": [ { "key": "exclude_comped", "default": "true", "locked": true, "note": null } ], "configNote": "Granularity (monthly, quarterly, yearly) is a view chosen at read time, not a stored definition." }, { "slug": "churn-analytics", "order": 10, "group": "movement", "title": "Churn analytics", "shortName": null, "url": "https://www.strategyoffinance.com/standards/churn-analytics/", "standard": "Churn is recognized in the first month with zero MRR after a qualifying gap — MRR is held through the last active month, not truncated at the last invoice date. Churn is reported in four views: monthly logo and dollar rates, tenure at churn, calendar seasonality, and survival by tenure.", "plain": "Churn is counted in the first month a customer pays nothing, and reported four ways: by logo, by dollar, by tenure, and by survival.", "summary": "Churn is recognized in the first zero-MRR month after a qualifying gap, reported four ways: logo and dollar rates, tenure at churn, seasonality, survival.", "reviewed": "2026-09-18", "glance": { "formula": "logo churn = churned logos ÷ last month’s active logos · dollar churn = churned MRR ÷ last month’s MRR · survival = surviving ÷ observable, at each tenure", "unit": "% per month", "bounded": "≥ 0", "defaults": "first-zero-month timing · 3-month window · churn_at_gap_start · seasonality flag at 2σ", "lever": "The reactivation window — the largest single lever on every churn figure", "readWith": [ "pause-vs-churn", "cohort-retention", "gross-revenue-retention" ], "appearsIn": [ "Board deck", "Renewal calendar", "Diligence" ] }, "stateIt": { "template": "Logo churn {x}% · dollar churn {y}% per month (SoF Standard v1.0: first-zero-month · 3-month window · numerator and denominator shown)", "checks": [ "Logo and dollar reported separately?", "Annualized by compounding, not by twelve?", "Numerator and denominator shown with the rate?", "Final months read with the trailing-gap policy in mind?" ] }, "exampleCsv": "https://www.strategyoffinance.com/standards/examples/churn-analytics.csv", "aliases": [ "Churn rate", "Logo churn", "Dollar churn", "Survival curve", "Tenure at churn" ], "topics": [ "fpa" ], "related": [ "pause-vs-churn", "cohort-retention", "gross-revenue-retention", "concentration" ], "configKeys": [ { "key": "reactivation_window_months", "default": "3", "locked": false, "note": null }, { "key": "trailing_gap_policy", "default": "churn_at_gap_start", "locked": false, "note": null }, { "key": "thresholds.churn_seasonality_sigma", "default": "2", "locked": false, "note": null } ], "configNote": null }, { "slug": "concentration", "order": 11, "group": "structure", "title": "Concentration", "shortName": null, "url": "https://www.strategyoffinance.com/standards/concentration/", "standard": "Concentration is measured on MRR at month end, over resolved parent entities, comped excluded. Reported as top-10 share, top-20 share, a Herfindahl–Hirschman Index over revenue shares, and the trend of all three.", "plain": "Concentration measures how much of the business depends on how few customers, on resolved parents, by top-N share and HHI.", "summary": "Concentration is measured on month-end MRR over resolved parent entities: top-10 and top-20 share, a Herfindahl–Hirschman Index, and the trend of all three.", "reviewed": "2026-09-18", "glance": { "formula": "top-N share = Σ MRR of the largest N customers ÷ total MRR · HHI = Σ share² · effective customers = 1 ÷ HHI", "unit": "% · index from 0 to 1", "bounded": "HHI between 1/n and 1", "defaults": "MRR basis · resolved parents · comped excluded · warn at top-10 > 40%, top-20 > 60%, HHI > 0.15", "lever": "Entity resolution — billing accounts understate risk, always", "readWith": [ "the-measured-unit", "acv-and-arpa", "annual-recurring-revenue" ], "appearsIn": [ "Diligence", "Lender covenants", "Risk-factor disclosure" ] }, "stateIt": { "template": "Top-10 share {x}% · HHI {y} · effective customers {z} (SoF Standard v1.0: month-end MRR · resolved parents)", "checks": [ "Computed on parents, not billing accounts?", "HHI beside top-N share?", "Trend shown, not just level?", "Tenure and contract terms alongside?" ] }, "exampleCsv": "https://www.strategyoffinance.com/standards/examples/concentration.csv", "aliases": [ "Customer concentration", "Top-10 share", "Herfindahl–Hirschman Index", "HHI" ], "topics": [ "ma", "capital-allocation" ], "related": [ "annual-recurring-revenue", "the-measured-unit", "acv-and-arpa" ], "configKeys": [ { "key": "thresholds.top10_share_warn", "default": "0.40", "locked": false, "note": null }, { "key": "thresholds.top20_share_warn", "default": "0.60", "locked": false, "note": null }, { "key": "thresholds.concentration_hhi_warn", "default": "0.15", "locked": false, "note": null } ], "configNote": null }, { "slug": "growth-accounting", "order": 12, "group": "structure", "title": "Growth accounting", "shortName": null, "url": "https://www.strategyoffinance.com/standards/growth-accounting/", "standard": "Growth accounting decomposes each period's MRR change into its five movements and reports the quick ratio — gross additions divided by gross losses — together with the mix of additions by source.", "plain": "Growth accounting shows how a business grew, not just how fast: the quick ratio and the mix of new, expansion and reactivation.", "summary": "Growth accounting splits each period’s MRR change into five movements and reports the quick ratio, gross additions over gross losses, with the mix by source.", "reviewed": "2026-09-18", "glance": { "formula": "quick ratio = (new + expansion + reactivation) ÷ (contraction + churn) · mix = each addition type ÷ gross additions", "unit": "ratio · %", "bounded": "undefined when losses are zero · 1.0 = replacing exactly what is lost", "defaults": "quarterly · reactivation counted as an addition · constant-currency comparison alongside", "lever": "Period length — monthly is volatile, annual nets away the turning points", "readWith": [ "movement-taxonomy", "net-revenue-retention", "foreign-exchange" ], "appearsIn": [ "Board deck", "Investor update" ] }, "stateIt": { "template": "Quick ratio {x} · mix new {a}% / expansion {b}% / reactivation {c}% (SoF Standard v1.0: quarterly · reactivation in additions)", "checks": [ "Mix shown with the ratio?", "Period length stated?", "Undefined reported as undefined, not as infinity?", "FX-driven movements removed in the constant-currency view?" ] }, "exampleCsv": "https://www.strategyoffinance.com/standards/examples/growth-accounting.csv", "aliases": [ "Quick ratio", "SaaS quick ratio", "Growth mix" ], "topics": [ "fpa", "capital-allocation" ], "related": [ "movement-taxonomy", "foreign-exchange", "net-revenue-retention" ], "configKeys": [], "configNote": "None of its own; inherits the movement taxonomy and its upstream choices." }, { "slug": "acv-and-arpa", "order": 13, "group": "structure", "title": "ACV and ARPA", "shortName": null, "url": "https://www.strategyoffinance.com/standards/acv-and-arpa/", "standard": "ARPA is total MRR divided by active customers in the month. Because the average alone is nearly always misleading, the standard reports the distribution: per-customer annualized revenue at every decile, and customer counts and revenue by ACV band.", "plain": "ARPA is average revenue per account. The standard reports the whole distribution, because the average describes almost no customer.", "summary": "ARPA is total MRR over active customers. Because the average alone misleads, the standard reports the distribution: revenue by decile and counts by ACV band.", "reviewed": "2026-09-18", "glance": { "formula": "ARPA = total MRR ÷ active customers · new-business ARR per logo = new MRR × 12 ÷ new logos · plus the deciles of MRR × 12", "unit": "currency per account", "bounded": "≥ 0", "defaults": "MRR basis · comped excluded · ACV bands 5K / 25K / 100K / 500K (locked)", "lever": "Band boundaries — redraw the picture without changing a single customer", "readWith": [ "concentration", "annual-recurring-revenue", "growth-accounting" ], "appearsIn": [ "Segmentation", "Pricing review", "Board deck" ] }, "stateIt": { "template": "ARPA {x} · median {y} · p90/p50 {z} (SoF Standard v1.0: MRR basis · comped excluded · bands 5K/25K/100K/500K)", "checks": [ "Median and deciles beside the mean?", "New-business ARR per logo shown separately?", "ARPA movement decomposed with the bridge?", "Bands held constant across periods?" ] }, "exampleCsv": "https://www.strategyoffinance.com/standards/examples/acv-and-arpa.csv", "aliases": [ "Average revenue per account", "ARPA", "Annual contract value", "ACV bands" ], "topics": [ "pricing", "fpa" ], "related": [ "concentration", "annual-recurring-revenue", "growth-accounting" ], "configKeys": [ { "key": "segments.acv_bands", "default": "5K / 25K / 100K / 500K", "locked": true, "note": "upper bounds in base currency, annualized" } ], "configNote": null }, { "slug": "foreign-exchange", "order": 14, "group": "structure", "title": "Foreign exchange", "shortName": null, "url": "https://www.strategyoffinance.com/standards/foreign-exchange/", "standard": "Flows are converted at monthly-average rates for the month in which they occur. A missing rate falls back to the nearest prior month's rate and is logged as an assumption. Movements arising purely from rate changes are tagged fxdriven, sub-totalled in the bridge, and removed entirely in the constant-currency view.", "plain": "Revenue converts at the month's average rate, and currency-driven movements are tagged so the constant-currency view can remove them.", "summary": "Flows convert at monthly-average rates for the month they occur. Rate-driven movements are tagged, sub-totalled in the bridge, and removed in constant currency.", "reviewed": "2026-09-18", "glance": { "formula": "base-currency amount = native amount × the month’s average rate · constant currency = native amount × the base period’s rate", "unit": "currency", "bounded": "n/a", "defaults": "fx.flow_rate = monthly_average (locked) · fx.fallback = nearest_prior · base period = 12 months before the cutoff", "lever": "The base period — any other choice is a different \"constant\" currency", "readWith": [ "movement-taxonomy", "growth-accounting", "revenue-tie-out" ], "appearsIn": [ "Board deck", "Constant-currency growth", "Register" ] }, "stateIt": { "template": "Growth {x}% reported · {y}% in constant currency at {base period} rates (SoF Standard v1.0: monthly-average flow rates)", "checks": [ "Base period stated?", "FX-driven movements sub-totalled in the bridge?", "Missing rates logged as assumptions?", "Native amounts preserved on every row?" ] }, "exampleCsv": "https://www.strategyoffinance.com/standards/examples/foreign-exchange.csv", "aliases": [ "Constant currency", "FX translation", "Multi-currency revenue" ], "topics": [ "fpa", "modern-finance-function" ], "related": [ "monthly-recurring-revenue", "movement-taxonomy", "growth-accounting", "the-register" ], "configKeys": [ { "key": "fx.flow_rate", "default": "monthly_average", "locked": true, "note": null }, { "key": "fx.fallback", "default": "nearest_prior", "locked": false, "note": "alternative block" } ], "configNote": null }, { "slug": "revenue-tie-out", "order": 15, "group": "structure", "title": "Revenue tie-out", "shortName": null, "url": "https://www.strategyoffinance.com/standards/revenue-tie-out/", "standard": "Every report reconciles recognized revenue to reported revenue, month by month, and separately bridges billed to recognized so that timing differences are visible rather than netted. A report built from a file that does not tie to the financial statements is not complete under this standard.", "plain": "The customer file counts only once its recognized revenue agrees with the P&L, month by month, with billing timing shown separately.", "summary": "Every report reconciles recognized revenue to reported revenue month by month, and bridges billed to recognized so timing differences stay visible.", "reviewed": "2026-09-18", "glance": { "formula": "gap = reported − recognized · billing timing = billed − recognized", "unit": "currency · % of reported", "bounded": "n/a", "defaults": "warn when the gap exceeds 2% of reported · pause-held MRR isolated", "lever": "Comparing all-types recognized against a recurring-only reported figure — manufactures a gap the size of the non-recurring business", "readWith": [ "monthly-recurring-revenue", "annual-recurring-revenue", "the-register" ], "appearsIn": [ "Data room", "Quality of earnings", "Monthly close" ] }, "stateIt": { "template": "Tie-out: recognized {x} vs reported {y}, gap {z}% (SoF Standard v1.0: monthly · billed-to-recognized bridged)", "checks": [ "Every month reconciled, gaps explained rather than plugged?", "Reported figure is total revenue, matching the file's scope?", "Billing timing large and positive in prepaid months?", "Cutoffs aligned?" ] }, "exampleCsv": "https://www.strategyoffinance.com/standards/examples/revenue-tie-out.csv", "aliases": [ "Tie-out", "Revenue reconciliation", "Billed vs recognized vs reported" ], "topics": [ "ma", "modern-finance-function" ], "related": [ "monthly-recurring-revenue", "annual-recurring-revenue", "the-register", "revenue-types" ], "configKeys": [ { "key": "thresholds.tieout_gap_warn", "default": "0.02", "locked": false, "note": "2% relative" } ], "configNote": null }, { "slug": "definitional-sensitivity", "order": 16, "group": "structure", "title": "Definitional sensitivity", "shortName": null, "url": "https://www.strategyoffinance.com/standards/definitional-sensitivity/", "standard": "A report under this standard computes its headline retention under all defined variants and toggles — same data, same period, only the definition changes — and reports the spread between them in percentage points. A wide spread is not an error to be resolved. It is a property of the business, and it is a finding.", "plain": "The same data yields a family of NRRs. The spread between them is a finding about the business, not an error.", "summary": "A report under this standard computes headline retention under every defined variant and reports the spread in points. A wide spread is a finding, not an error.", "reviewed": "2026-09-18", "glance": { "formula": "spread = the highest NRR variant − the lowest, in percentage points", "unit": "percentage points", "bounded": "≥ 0", "defaults": "six NRR variants computed · warn when the spread exceeds 5 points", "lever": "Usage inclusion — 14 of the 27 points in the worked example", "readWith": [ "net-revenue-retention", "gross-revenue-retention", "the-register" ], "appearsIn": [ "Diligence preparation", "Board deck", "Methodology note" ] }, "stateIt": { "template": "NRR {x}% (default) · range {min}–{max}% across six variants · spread {s} points (SoF Standard v1.0)", "checks": [ "All variants computed, none curated away?", "Default variant marked?", "Spread reported in points?", "The usage pair explained?" ] }, "exampleCsv": "https://www.strategyoffinance.com/standards/examples/definitional-sensitivity.csv", "aliases": [ "NRR sensitivity", "Definition spread", "Retention variants side by side" ], "topics": [ "ma", "ipo-readiness" ], "related": [ "net-revenue-retention", "gross-revenue-retention", "the-register" ], "configKeys": [ { "key": "thresholds.nrr_spread_warn_points", "default": "5", "locked": false, "note": null } ], "configNote": null }, { "slug": "the-register", "order": 17, "group": "structure", "title": "The register", "shortName": null, "url": "https://www.strategyoffinance.com/standards/the-register/", "standard": "Every gap in the data produces a logged, visible, reviewable entry. Assumptions record where a default was applied; exceptions record where the data was anomalous. The register accompanies every report. A report without its register is not complete under this standard.", "plain": "Every assumption applied and every anomaly found is logged, so a reader can argue with a premise instead of discovering it later.", "summary": "Every gap in the data produces a logged, reviewable entry: assumptions record applied defaults, exceptions record anomalies. No register, no complete report.", "reviewed": "2026-09-18", "glance": { "formula": "entries = assumptions (a default was applied) + exceptions (the data was anomalous), each keyed, with a severity of info, warn or blocking", "unit": "entries by severity", "bounded": "n/a", "defaults": "every threshold feeds a finding · blocking stops the computation · reviews append-only", "lever": "Completeness — a register that omits inconvenient entries is worse than none", "readWith": [ "revenue-tie-out", "definitional-sensitivity", "pause-vs-churn" ], "appearsIn": [ "Data room", "Quality-of-earnings working papers", "Restatements" ] }, "stateIt": { "template": "Register: {n} assumptions · {m} exceptions ({b} blocking) (SoF Standard v1.0: complete, unfiltered, reviews append-only)", "checks": [ "Every assumption named with customer, amount and alternative?", "Severity counts shown?", "Blocking conditions resolved before numbers are quoted?", "Register delivered with the report?" ] }, "exampleCsv": "https://www.strategyoffinance.com/standards/examples/the-register.csv", "aliases": [ "Assumptions register", "Exceptions register", "Assumptions and exceptions log" ], "topics": [ "ma", "modern-finance-function" ], "related": [ "revenue-tie-out", "definitional-sensitivity", "pause-vs-churn", "revenue-types" ], "configKeys": [], "configNote": "Every threshold in the definition config feeds a register finding." } ], "changelog": [ { "version": "1.0", "date": "2026-09-18", "kind": "major", "notes": [ "Initial public release: seventeen terms covering customer-level revenue metrics — the measured unit through the register.", "Locked defaults: comped customers excluded; usage included in NRR; monthly-average FX flow rates; the five-movement taxonomy; the seven-value revenue-type enumeration; ACV bands at 5K / 25K / 100K / 500K.", "Default NRR variant is the monthly-cohort compounded trailing twelve months; the year-over-year snapshot and quarterly annualized variants are defined and computed alongside.", "Reactivation window default of three months; right-censored gaps governed by a separate trailing-gap policy." ] } ], "generatedAt": "2026-09-18T18:05:34.096Z" }