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This is a highly simplified model that is trying to illustrate the impact of missed revenue targets on cash burn. To keep it simple, the model makes a range of simplifying assumptions. For example, it is assumed that your dollar retention rate is 100%, that in any given year you add the same amount of net new ARR every month, and that 100% of your new deals are paid upfront for 12 months.
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2018
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Jan 2018Feb 2018Mar 2018Apr 2018May 2018Jun 2018Jul 2018Aug 2018Sep 2018Oct 2018Nov 2018Dec 2018
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ARR beginning of month\$6.00M\$7.00M\$8.00M\$9.00M\$10.00M\$11.00M\$12.00M\$13.00M\$14.00M\$15.00M\$16.00M\$17.00M
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Cash-in from 2017 renewals\$0.50M\$0.50M\$0.50M\$0.50M\$0.50M\$0.50M\$0.50M\$0.50M\$0.50M\$0.50M\$0.50M\$0.50M
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Total cash-in\$1.50M\$1.50M\$1.50M\$1.50M\$1.50M\$1.50M\$1.50M\$1.50M\$1.50M\$1.50M\$1.50M\$1.50M
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Total cash-out\$2.00M\$2.10M\$2.20M\$2.30M\$2.40M\$2.50M\$2.60M\$2.70M\$2.80M\$2.90M\$3.00M\$3.10MTotal net burn:
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Net burn\$0.50M\$0.60M\$0.70M\$0.80M\$0.90M\$1.00M\$1.10M\$1.20M\$1.30M\$1.40M\$1.50M\$1.60M\$12.60M
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ARR end of month\$7.00M\$8.00M\$9.00M\$10.00M\$11.00M\$12.00M\$13.00M\$14.00M\$15.00M\$16.00M\$17.00M\$18.00M
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2019 - budget
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Jan 2019Feb 2019Mar 2019Apr 2019May 2019Jun 2019Jul 2019Aug 2019Sep 2019Oct 2019Nov 2019Dec 2019ARR end of year:
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ARR beginning of month\$18.00M\$19.50M\$21.00M\$22.50M\$24.00M\$25.50M\$27.00M\$28.50M\$30.00M\$31.50M\$33.00M\$34.50M
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Cash-in from 2018 renewals\$1.50M\$1.50M\$1.50M\$1.50M\$1.50M\$1.50M\$1.50M\$1.50M\$1.50M\$1.50M\$1.50M\$1.50M
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Total cash-in\$3.00M\$3.00M\$3.00M\$3.00M\$3.00M\$3.00M\$3.00M\$3.00M\$3.00M\$3.00M\$3.00M\$3.00M
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Total cash-out\$3.35M\$3.60M\$3.85M\$4.10M\$4.35M\$4.60M\$4.85M\$5.10M\$5.35M\$5.60M\$5.85M\$6.10MTotal net burn:
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Net burn\$0.35M\$0.60M\$0.85M\$1.10M\$1.35M\$1.60M\$1.85M\$2.10M\$2.35M\$2.60M\$2.85M\$3.10M\$20.70M
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ARR end of month\$19.50M\$21.00M\$22.50M\$24.00M\$25.50M\$27.00M\$28.50M\$30.00M\$31.50M\$33.00M\$34.50M\$36.00M
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ARR y/y growth rate179%163%150%140%132%125%119%114%110%106%103%100%
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2019 - lower growth scenario
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Jan 2019Feb 2019Mar 2019Apr 2019May 2019Jun 2019Jul 2019Aug 2019Sep 2019Oct 2019Nov 2019Dec 2019
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ARR beginning of month\$18.00M\$19.00M\$20.00M\$21.00M\$22.00M\$23.00M\$24.00M\$25.00M\$26.00M\$27.00M\$28.00M\$29.00M
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Cash-in from 2018 renewals\$1.50M\$1.50M\$1.50M\$1.50M\$1.50M\$1.50M\$1.50M\$1.50M\$1.50M\$1.50M\$1.50M\$1.50M
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Total cash-in\$2.50M\$2.50M\$2.50M\$2.50M\$2.50M\$2.50M\$2.50M\$2.50M\$2.50M\$2.50M\$2.50M\$2.50M
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Total cash-out\$3.35M\$3.60M\$3.85M\$4.10M\$4.35M\$4.60M\$4.85M\$5.10M\$5.35M\$5.60M\$5.85M\$6.10MTotal net burn:
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Net burn\$0.85M\$1.10M\$1.35M\$1.60M\$1.85M\$2.10M\$2.35M\$2.60M\$2.85M\$3.10M\$3.35M\$3.60M\$26.70M
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ARR end of month\$19.00M\$20.00M\$21.00M\$22.00M\$23.00M\$24.00M\$25.00M\$26.00M\$27.00M\$28.00M\$29.00M\$30.00M
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ARR y/y growth rate171%150%133%120%109%100%92%86%80%75%71%67%
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Created by Christoph Janz of Point Nine Capital
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www.pointninecap.com
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