Useful Acronyms for Software Executives

By Jeff Moore, Director of Business Development, Software Equity Group

We’ve been publishing a plethora of content to help SaaS founders and CEOs focus on what they should think of today to prepare for an exit down the road. Yet, we realized we often use terminology and acronyms that may not be widely known, especially for executives who may not be familiar with financial and accounting principles. It may seem like a different world, and it requires a significant expansion in your financial vocabulary. But don’t worry, like most things in life, it becomes second nature through time and repetition.

I spent the last 20 years in the military, an organization that seemingly prides itself on brevity and speaking largely with abbreviations. Much like the military, M&A advisors and the clients we represent, value time. Thus, it’s necessary, even critical, to ensure our interactions are succinct and efficient.

Having transitioned recently into the corporate world, it was apparent that a significant amount of note-taking was inevitable. I didn’t have a cheat sheet for the terms and acronyms I heard daily, even hourly, so I created one and shared it with my fellow coworkers and new hires. Since then, I have received many compliments about how having this list of terms has positively impacted the quality of understanding as a new hire. If it can help me, someone already accustomed to speaking with brevity, I hope it can serve you as well. While the list is extensive and continues to grow, here are a few of the acronyms and terms I find to be the most useful regularly. Some of the terminologies may seem fairly obvious, but we hope this might serve as a quick refresher for something you may have forgotten, or even better, you learn something new.

Acronym Term
ACV Annual Contract Value
ARPU Average Revenue per User
ARR Annual Recurring Revenue
ARR Retention Annual Recurring Revenue Retention
ASP Average Selling Price
B2B Business to Business
B2C Business to Consumer
CAC Customer Acquisition Cost
CAGR Compound Annual Growth Rate
COGS Cost of Goods Sold
DAU Daily Active Users
DCF Discounted Cash Flow
EBITDA Earnings Before Interest, Taxes, Depreciation & Amortization
EV Enterprise Value
FCF Free Cash Flow
FT Full Time
FTE Full Time Equivalent
G&A General & Administrative
GPM or GM Gross Profit Margin or Gross Margin
IAAS Infrastructure as a Service
IRR Internal Rate of Return
LTV Lifetime Value or Customer Lifetime Value
MAU Monthly Active Users
MQL Marketing Qualified Lead
MoM Month Over Month
MRR Monthly Recurring Revenue
NI Net Income
NOI Net Operating Income
NPV Net Present Value
OPEX Operating Expenditures
P&L Profit & Loss Statement
PAAS Platform as a Service
QoQ Quarter Over Quarter
R&D Research & Development
R40 Rule of 40%
ROI Return on Investment
S&M Sales and Marketing
SaaS Software as a Service
SAM Serviceable Addressable Market
SG&A Selling, General & Administrative
SMB Small & Medium-Sized Businesses
SOM Serviceable Obtainable Market
SQL Sales Qualified Lead
TAM Total Addressable Market
TCV Total Contract Value
TTM Trailing Twelve Months
WACC Weighted Average Cost of Capital
YoY Year Over Year

Please don’t hesitate to reach out if you have any questions about these acronyms.

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