Fig. 01 · Glossary
Magic Number
Also known as SaaS Magic Number, Sales Efficiency
Definition
Magic Number estimates how efficiently sales and marketing spend converts into recurring revenue. A common formula is net new ARR in the current quarter divided by prior-quarter sales and marketing spend, often annualized. It is useful directionally but must be interpreted with CAC payback, gross margin, expansion, and sales-cycle length.
Magic Number is valuable when the underlying data is clean. It is misleading when sales and marketing spend includes founder time, partner subsidies, implementation work, or customer-success expansion capacity.
Use it as a directional health check, not a board-level answer by itself.
Human Renaissance glossary · operator-grade definitions · Research methodology
