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The Three-Year Migration and Financial Performance Model
| Commercial Metric | Year 0 (Legacy Flat) | Year 1 (Transition) | Year 2 (Expansion) | Year 3 (Scaled Maturity) |
|---|---|---|---|---|
| Total Active Customers | 1,200 | 1,380 | 1,650 | 2,050 |
| Starter Tier Accounts (\$6k) | 0 (All at \$15k) | 520 (37.7%) | 610 (37.0%) | 720 (35.1%) |
| Professional Tier Accounts (\$18k) | 0 | 580 (42.0%) | 710 (43.0%) | 880 (42.9%) |
| Enterprise Tier Accounts (\$48k) | 0 | 280 (20.3%) | 330 (20.0%) | 450 (22.0%) |
| Enterprise Accounts with Connector Add-ons | 0 | 45 | 95 | 175 |
| Blended Average Revenue Per User (ARPU) | \$15,000 | \$19,536 | \$21,588 | \$23,892 |
| Starter Tier Revenue | \$0 | \$3,120,000 | \$3,660,000 | \$4,320,000 |
| Professional Tier Revenue | \$0 | \$10,440,000 | \$12,780,000 | \$15,840,000 |
| Enterprise Base Tier Revenue | \$0 | \$13,440,000 | \$15,840,000 | \$21,600,000 |
| Connector Expansion Add-On Revenue | \$0 | \$540,000 | \$1,520,000 | \$3,500,000 |
| Transitional Grandfathering Discounts | \$0 | -\$580,000 | -\$180,000 | \$0 |
| Total Realized ARR | \$18,000,000 | \$26,960,000 | \$33,620,000 | \$45,260,000 |
| Gross Revenue Retention (GRR) | 82.0% | 88.5% | 91.2% | 93.4% |
| Net Revenue Retention (NRR) | 101.0% | 114.2% | 121.8% | 126.5% |
| Gross Margin % | 71.0% | 76.5% | 79.2% | 81.5% |
| Implied ARR Valuation Multiple | 5.0x | 6.5x | 7.5x | 8.5x |
| Enterprise Valuation | \$90,000,000 | \$175,240,000 | \$252,150,000 | \$384,710,000 |
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Reference & Evidence
Source: Table from this essay. Sources and interpretation are given in the article.