SaaS Financial Model (5 Year Financial Forecast)

This SaaS Financial Model (5 Year Financial Forecast, Income Statement, Balance Sheet, Cash Flow, SaaS Metrics & Ratios, Valuation) comes in distinct sections highlighted below, which are easy to populate. Once populated, the model outputs Detailed and Summarized Financial Projections and 3-way Financial Statements (Income Statement, Balance Sheet, and Cash Flow Statement) and a Discounted Cash Flow (DCF) Valuation on the Company. This is an excellent model for internal (management, accounting, or finance teams) or external (investors, board members, external stakeholders) purposes. 

General Assumptions

Starts with basic model questions on the start date of the model, tax rate assumption, working capital assumptions, and funding assumptions.

Revenue Assumptions

Revenue assumptions are the anticipated factors that drive a company’s income generation over a specific period. These assumptions form the basis for financial projections and are crucial for planning and decision-making. In our model, we have included detailed inputs on # of users, estimated monthly growth rate in users, assumed annual churn rate %, subscriber breakdown in different tier levels, tiered subscription fees offered, and direct costs, including customer acquisition costs.

Operating Expenses Assumptions

Operating expense assumptions are typically based on historical data, industry benchmarks, market trends, and management’s judgment. They are crucial for estimating the business’s total cost and determining profitability. Like revenue assumptions, it’s important to regularly review and adjust operating expense assumptions to reflect changes in the business environment and ensure the accuracy of financial forecasts. In our model we have included detailed inputs on Staff Costs (Management, Development Team, Customer Service Team, Sales Team, Other), Typical Software related Operational Expenditure items, however, you can add any other expenses you think may be relevant to your business in this sheet. 

Capex Assumptions
Capital expenditure (Capex) assumptions refer to the anticipated investments a company plans to make in long-term assets, such as property, plant, equipment, and technology, over a specific period. These assumptions are crucial for financial planning, budgeting, and forecasting, impacting the company’s cash flow, profitability, and growth prospects. We have included a fixed asset cost assumption schedule here for the main items likely to be on a company’s capex sheet and a use of funds assumption list with a corresponding pie chart. 

Monthly Projections

We have broken down projections on a Month-by-month basis when projecting income statements, balance sheets, and cash flow statements. The monthly projections are provided over a 5 year time frame. This is particularly useful for businesses looking at month-on-month trends and insights in the business, which leads to better decision making and also better budgeting should there be a need to either raise more capital, pursue growth opportunities from excess capital, or pay down interest-bearing debt. Monthly projections also help a business ascertain what performance may be seasonal in nature when looking at growth projections on a month-over-previous-years-month basis.  

Annual Projections

The model has Annualized Financial Projections of Income Statement, Balance Sheet, and Cash Flow Statement over a 5-year time frame. Annual projections provide an excellent overview of expected revenues, expenses, profits, cash flow, and other key financial metrics for the upcoming year. Annual predictions are essential for strategic planning, budgeting, fundraising, and performance evaluation for any company at any stage of their business cycle. 

SaaS & Other Metrics

SaaS-specific metrics (MRR, ARR, CAC, CLTV, ACS, ARPU, Churn rate, Retention Rate), Profitability Ratios, Liquidity Ratios, and Asset Turnover Ratios are provided. 

Summary of Financial Statements

Summarized Financial Statements over a 5 year time frame helps for better snapshots of financial performance. Income Statement, Balance Sheet, and Cash Flow Statement are all provided. 

Charts

SaaS specific Charts available including customer growth Over Time, Profitability Margins (Gross Profit Margin, EBITDA Margin and Net Profit Margin), Revenue vs Direct Costs Projections

DCF Valuation

We have included a Discounted Cash Flow (DCF) Valuation model showing the Business’s Net Present Value (NPV) based on a series of growth rates and assumptions. Weighted Average Cost of Capital Assumptions also provided including Risk Free rate, Beta, Risk Premium and Equity Risk Premium. A DCF valuation is a method used to estimate the value of an investment, business, or asset by discounting its expected future cash flows to present value. It is based on the principle that the value of an investment is determined by the present value of its future cash flows. The DCF valuation technique is widely used in finance, investment analysis, and corporate finance for making investment decisions, determining the fair value of securities, and evaluating the worth of businesses.

Depreciation Schedule
Detailed Depreciation Schedule shows additions/disposals to the Fixed Asset Register of the business. Sections included for Computer Equipment, Furniture & Fittings, Others. 

Debt Schedule

Debt schedule provided with interest rate assumptions and payback period assumptions included. 

Equity Schedule

Equity schedule provided with assumptions on all investments into the business by investors or owners.