My key KPI: Annualised recurring revenue
Welcome to ‘My key KPI’, a new weekly content series where we ask CFOs and FDs what metrics and measures they use to drive their businesses forward.
The aim is to understand how different finance professionals, across a broad array of industries and sectors, use data to inform their decision making.
In this week's edition, we hear from David Carr, the CFO of Clear Books.
Clear Books is a name that’ll be very familiar to AccountingWEB readers. The business, founded by Tim Fouracre in 2008, provides small business accounting software.
Fouracre has moved on to a new venture, but Clear Books is still on the move. Now under the leadership of Phil Sayers, the company is moving forward into the blooming era of digital taxation.
At the tip of the spear is Clear Books’ CFO David Carr. Carr operates in a unique hybrid role, looking after both the numbers and the product strategy. For the purposes of My key KPI, though, we asked Carr to put his CFO hat on.
Annualised recurring revenue, he explained, is the metric he returns to constantly. “As a subscription business, ARR is the best single indicator for how we're doing,” Carr said. “You can slice it by date range, product, customer group, user cohort, marketing campaign, etc.
“It's a simple and tangible metric that anyone in the business can use at a glance to know how we're doing.”
ARR is considered a baseline subscription software KPI, but Carr finds it useful because it’s very pliable. The metric can be used to “drill down on the areas of strategic focus for us, such as a new product launch, customers who use certain features more than others, customers in a particular target market.
“So we use the industry best practice metric but within the context of the unique challenges we're focussing on.”