SaaS Magic Number Benchmarks
Go-to-Market Efficiency — 172 companies tracked
Data availability note
The SaaS Magic Number requires quarterly ARR snapshots and a breakdown of sales & marketing spend by quarter. Most public companies report ARR annually or disclose S&M spend as a combined line item. We are building the pipeline to extract this data from earnings transcripts and supplemental financial packages. Companies will appear here as data becomes available.
Your Magic Number Starts With Retention
The Magic Number measures how efficiently you acquire new revenue — but it only stays healthy if existing revenue doesn't leak. Feedalyze connects to HubSpot, Intercom, or Zendesk and uses AI to detect at-risk accounts before they cancel, protecting the ARR base your Magic Number depends on.
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Magic Number Data
Data pendingWhat is the SaaS Magic Number?
The SaaS Magic Number, introduced by Lars Leckie at Hummer Winblad, measures how efficiently a company converts sales and marketing spend into new ARR. It answers a simple question: for every dollar spent on go-to-market, how much annualized recurring revenue does the company generate? A score above 0.75 indicates efficient GTM; above 1.0 means each S&M dollar generates more than $1 in new ARR.
Formula:Magic Number = (Current Quarter ARR − Prior Quarter ARR) × 4 / Prior Quarter Sales & Marketing Spend
Interpretation:Magic Number ≥ 1.0 = Invest aggressively in sales and marketing. Magic Number 0.75–1.0 = Efficient GTM, steady growth. Magic Number 0.5–0.75 = Review CAC efficiency before scaling further. Magic Number < 0.5 = Re-evaluate GTM strategy. This metric is most useful for companies with explicit quarterly ARR disclosures and transparent S&M reporting.
Frequently Asked Questions
What is a good Magic Number for a SaaS company?
A Magic Number of 0.75 or above indicates efficient GTM spending. Above 1.0 is a strong signal to invest aggressively in go-to-market. Between 0.5 and 0.75, review CAC efficiency before scaling further. Below 0.5, re-evaluate the GTM strategy.
How is the SaaS Magic Number calculated?
Magic Number = (Current Quarter ARR − Prior Quarter ARR) × 4 / Prior Quarter S&M Spend. The formula annualizes incremental ARR and divides by the S&M investment that generated it. A result of 1.0 means $1 of ARR generated for every $1 of S&M spend.
What is the difference between Magic Number and CAC Payback Period?
Magic Number is a ratio showing ARR generated per dollar of S&M — useful for directional analysis. CAC Payback Period is a time-based metric showing months to recover acquisition cost in gross profit — useful for cash flow planning. Use both together.
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