Useful Acronyms for Software Executives

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.

AcronymTerm
ACVAnnual Contract Value
ARPUAverage Revenue per User
ARRAnnual Recurring Revenue
ARR RetentionAnnual Recurring Revenue Retention
ASPAverage Selling Price
B2BBusiness to Business
B2CBusiness to Consumer
CACCustomer Acquisition Cost
CAGRCompound Annual Growth Rate
COGSCost of Goods Sold
DAUDaily Active Users
DCFDiscounted Cash Flow
EBITDAEarnings Before Interest, Taxes, Depreciation & Amortization
EVEnterprise Value
FCFFree Cash Flow
FTFull Time
FTEFull Time Equivalent
G&AGeneral & Administrative
GPM or GMGross Profit Margin or Gross Margin
IAASInfrastructure as a Service
IRRInternal Rate of Return
LTVLifetime Value or Customer Lifetime Value
MAUMonthly Active Users
MQLMarketing Qualified Lead
MoMMonth Over Month
MRRMonthly Recurring Revenue
NINet Income
NOINet Operating Income
NPVNet Present Value
OPEXOperating Expenditures
P&LProfit & Loss Statement
PAASPlatform as a Service
QoQQuarter Over Quarter
R&D Research & Development
R40Rule of 40%
ROIReturn on Investment
S&M Sales and Marketing
SaaSSoftware as a Service
SAMServiceable Addressable Market
SG&A Selling, General & Administrative
SMBSmall & Medium-Sized Businesses
SOMServiceable Obtainable Market
SQLSales Qualified Lead
TAMTotal Addressable Market
TCVTotal Contract Value
TTMTrailing Twelve Months
WACCWeighted Average Cost of Capital
YoYYear Over Year

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