PROBLEM: Sales Productivity & Efficiency
Read "One Number to Manage Your SaaS Sales &Marketing Spend: The CAC ratio" - by Bessemer Ventures
Read "The unprofitable SaaS business model trap" - by Jason Cohen
Review Workday's non-GAAP financial data and answer the key questions below:
Calculate:
i. CAC ratio for Workday for year ended JAN 31, 2013.
ii. Compare Workday's performance against Cohen's analysis below:
Say the average customer represents R dollars in annual revenue. That's:
- $4R of revenue over the lifetime of the customer. But:
- $1.5R is spent to acquire the customer (the pay-back period).
- $1.2R is spent in gross margin to service the customer (4 years times 30% cost).
- $0.511. spent on R&D (15% over 4 years).
- $0.511. spent on Admin (15% over 4 years).
So out of the original $4R, we're left with SO.1R in profit. That's 1/40th of the revenue making its way to actual bottom-line profitability, and even that takes 4 years to achieve.
iii. What in Workday's cost structure do you think is driving Workday's stock performance?
Attachment:- Assignment Files.rar