How to Read a SaaS P&L — Line by Line

Understand the core P&L structure and metrics that acquirers, investors, and board members focus on—revenue, cost of goods sold, gross margin, operating expenses, and EBITDA.

Maintained in the open at github.com/Golden-Section-Tx/playbook · CC BY-SA 4.0

PlayersFounder, CFO
Initial Effort5 SP
Ongoing3 SP
FrequencyMonthly
StageEarly Traction

The Profit & Loss statement is a fundamental accounting report, and we expect that you have experience with it already. Here our aim is to simply remind ourselves of the flow of profit and costs through the P&L and how these numbers affect other metrics down the line. We will turn to more SaaS-specific metrics next.

Mistakes this play prevents: #72 #85 #86 #150

Questions this play answers

How do I read and understand my company P&L?

Understand the core P&L structure and metrics that acquirers, investors, and board members focus on—revenue, cost of goods sold, gross margin, operating expenses, and EBITDA.

How does my P&L connect to other SaaS metrics?

The Profit & Loss statement is a fundamental accounting report, and we expect that you have experience with it already. Here our aim is to simply remind ourselves of the flow of profit and costs through the P&L and how these numbers affect other metrics down the line. We will turn to more SaaS-specific metrics next.

Do I need accounting expertise before working through SaaS metrics?

The Profit & Loss statement is a fundamental accounting report, and we expect that you have experience with it already. Here our aim is to simply remind ourselves of the flow of profit and costs through the P&L and how these numbers affect other metrics down the line. We will turn to more SaaS-specific metrics next.