Financials

KPI Definitions

AI Diligence Console

Rōvn KPI Definitions

Date: 2026-05-14 Purpose: Precise definitions for SaaS metrics used in Rōvn financial model and investor reporting.

1. ARR: Annual Recurring Revenue

Definition: Annualized run-rate of all recurring revenue contracts at end of period.

Formula:

ARR = (facility workflow layer MRR × 12) + (Verified API run-rate × 12) + (Platform contract annualized portion)

facility workflow layer MRR: Sum of all monthly subscription fees from active facility logos. Includes Core ($10K/mo · $120K ACV), Operator ($20K/mo · $240K ACV), and Platform ($1M+/yr custom) tier subscriptions. The $12K 90-day Pilot is a one-time pilot-to-production fee recognized as services revenue, not ARR.

Verified API run-rate: Trailing 30-day usage × 12, plus all platform subscription fees (Scale tier $2.5K/mo + per-verification overage).

Platform contract annualization: Total contract value / contract length in years.

Inclusions: - Subscription revenue (recurring) - Usage-based revenue at run-rate (Verified API verifications, recredentialing renewals) - Platform tier minimum commitments

Exclusions: - One-time implementation/onboarding fees - Professional services (custom integration work) - Pass-through pure pass-throughs (Persona/NPDB fees billed at cost)

Reporting cadence: Monthly, with quarterly investor-grade attestation.

2. NRR: Net Revenue Retention

Definition: Of revenue from cohort N at start of period, how much remains at end of period (after upgrades, downgrades, churn).

Formula:

NRR = (Starting ARR + Expansion - Contraction - Churn) / Starting ARR

Target: 130%+ within 24 months of first paying logo.

Drivers for Rōvn: - facility workflow layer Pilot-to-Core conversion ($12K 90-day Pilot → $10,000/mo Core ($120K ACV) or $20,000/mo Operator ($240K ACV)) and subsequent tier upgrades (Core → Operator → Platform) - Verified API usage expansion (verification volume grows as facility expands hiring) - Recredentialing recurring revenue (each renewal adds API revenue) - Worker count growth (more verified workers in customer's hiring funnel)

Risk: Pilot tier customers who don't upgrade drag NRR. Mitigation: tight Pilot SLA + clear upgrade triggers (e.g., volume threshold).

3. GRR: Gross Revenue Retention

Definition: Of revenue from cohort N at start of period, how much remains BEFORE counting expansion. Measures pure churn.

Formula:

GRR = (Starting ARR - Contraction - Churn) / Starting ARR

Target: 90%+ annually.

Why important: GRR isolates churn from expansion. A high NRR with low GRR means expansion is masking churn, a long-term red flag.

facility workflow layer churn drivers: - Facility budget cuts (5-7% annual industry baseline) - Sales failure to articulate value at renewal - Competitive displacement (rare in credentialing, sticky vendor)

4. CAC: Customer Acquisition Cost

Definition: Fully-loaded cost to acquire one new paying customer.

Formula (facility workflow layer):

CAC_Connect = (Sales spend + Marketing spend allocable to facility workflow layer) / New facility workflow layer logos in period

Formula (Verified API):

CAC_API = (Developer relations + content + API marketing spend) / New paying API customers in period

Rōvn-specific notes: - Year 1: Founder-led sales, CAC ≈ $0 cash but high opportunity cost. - Year 2: First sales hire, CAC measured starting here. - Year 3+: Industry standard for healthcare-SaaS CAC = $15-40K per logo.

Target: CAC / Annual ACV < 1.0 for facility workflow layer (12-month payback or better).

5. LTV: Lifetime Value

Definition: Total gross profit from a customer over their entire tenure.

Formula:

LTV = Annual ACV × Tenure (years) × Gross margin

Rōvn assumptions (aligned to 3_CASE_MODEL_SUMMARY.md): - facility workflow layer ACV (blended): $18K → $165K over Y1→Y5 (Base case; rising as the tier mix drifts from Pilot-converted Core toward Operator and the first Platform deals) - Tenure: 4 years (NCQA-aligned recredentialing cadence locks customers in; 5% gross annual churn ⇒ ~90%+ GRR, consistent with a ~4-year average life) - Gross margin: 85% (facility workflow layer SaaS) / 70-86% (API blended with cache uplift)

Sample calc (facility workflow layer, Y5 blended ACV $165K):

LTV = $165,000 × 4 × 0.85 = $561,000

This is a per-logo gross-profit LTV at the Y5 blended ACV. An earlier draft used a $22K ACV (≈ $74,800 LTV) that predated confirmed pricing, superseded. With 130% NRR, the expansion-inclusive LTV is higher still; the figure above is the conservative no-expansion view.

LTV/CAC target: 3.0x or better (industry standard for healthcare-SaaS Series A).

6. Magic Number

Definition: Capital efficiency metric, how much new ARR each dollar of S&M produces.

Formula:

Magic Number = (Current quarter ARR - Prior quarter ARR) × 4 / Prior quarter S&M spend

Or simplified annual:

Magic Number = New ARR added in year / S&M spend in prior period

Interpretation: - > 1.0: Highly efficient growth, accelerate spend - 0.5-1.0: Healthy, maintain pace - < 0.5: Inefficient, slow growth, fix conversion or product-market fit

Rōvn target: Magic Number > 0.7 by Y3, > 1.0 by Y4.

7. Rule of 40

Definition: Combined growth rate + EBITDA margin ≥ 40%. SaaS investor heuristic.

Formula:

Rule of 40 = ARR growth % + EBITDA margin %

Rōvn projection (Base case):

Year	ARR growth %	EBITDA margin %	Rule of 40
Y2	150%	-300% (heavy burn)	-150%
Y3	367%	-150%	217%
Y4	329%	-50%	279%
Y5	181%	0% (break-even)	181%

Y3+ very strong Rule of 40. Y1-Y2 negative is normal for pre-Series A.

8. Cached-Replay Margin Curve (Proprietary)

Definition: % of API verifications served from Rōvn cache (no source pass-through fee) vs. served fresh from external source (with fee).

Formula:

Cached %     = Cached verifications / Total verifications
API GM       = Raw_GM + Cached % × (Cached_GM - Raw_GM)
where:
  Raw_GM    = 40% (margin on pass-through verifications)
  Cached_GM = 92% (margin on cached verifications)

Why proprietary: This is the Rōvn moat. Every verified worker profile and every credential renewal expands cache. Cache grows monotonically with network density.

Projected (Base):

Year	Cached %	API GM
Y1	0%	40%
Y2	15%	47.8%
Y3	35%	58.2%
Y4	55%	68.6%
Y5	70%	76.4%

Compounding effect: As GM rises, every new API customer is more profitable. This is the gross-margin expansion story for Series A.

How to track: - ai_runs receipts table includes cache_hit boolean - Monthly aggregation: cached_count / total_count - Quarterly margin reconciliation against actual P&L

9. Quick Ratio (Bessemer SaaS metric)

Definition: Ratio of "good" ARR movement (new + expansion) to "bad" ARR movement (downgrade + churn).

Formula:

Quick Ratio = (New ARR + Expansion ARR) / (Downgrade ARR + Churn ARR)

Target: > 4 for top-quartile SaaS companies at this stage.

10. Burn Multiple

Definition: Net cash burned / new ARR added in a year. Capital efficiency.

Formula:

Burn Multiple = Net cash burned in year / Net new ARR added in year

Targets: - < 1.0: Best-in-class - 1.0-2.0: Healthy - 2.0-3.0: Acceptable for early-stage - > 3.0: Concerning

Rōvn Y2 projection (Base, aligned to 3_CASE_MODEL_SUMMARY.md): - Net new ARR: ~$2.2M (Y2 Base ARR $2.44M − Y1 Base ARR $0.24M) - Net burn: ~$2.2M (most of the $2.25M raise deployed in Y2) - Burn multiple: $2.2M ÷ $2.2M = ~1.0 → best-in-class / healthy boundary for pre-Series A

11. Worker Funnel Conversion (Network Density)

Definition: Rate at which free Passport workers convert into "active" status (i.e., visible to facilities for hiring).

Formula:

Active conversion = (Workers with verified credentials × current location active) / Total Passport registrations

Target: 30%+ active conversion within 3 months of registration.

Why important: Workers are the supply side that makes facility workflow layer valuable. Low active conversion means worker count is vanity. High active conversion means real network density.

12. Source Authority Adapter Coverage

Definition: % of credential verification requests that have a working "first-party" source integration (vs. requiring manual fallback).

Formula:

Adapter coverage = Verifications routed via primary-source adapter / Total verifications

Target: > 90% by end of Y2. > 99% by end of Y3.

Why important: Adapter coverage drives cache density and verification SLA. Low coverage = manual fallback = high cost + slow verification.

13. AI Receipt Coverage

Definition: % of customer-visible decisions that have a corresponding ai_runs receipt with source citations.

Formula:

Receipt coverage = Decisions with receipts / Total customer-visible decisions

Target: 100%. This is non-negotiable, Rōvn's trust positioning depends on receipt coverage.

Why important: Trust differentiator vs. Vivian/Symplr/legacy CVOs. No receipt = no defensibility.

14. Glossary

Term	Definition
Active facility	Logo paying any facility workflow layer tier in current month
Active worker	Passport user with at least one verified credential current to today
Cache hit	API verification answered from Rōvn cache without source-side network call
Receipt	ai_runs record with citation chain for a customer-visible decision
Source adapter	First-party integration to authoritative credential source (NPDB, Nursys)
Tier upgrade	Customer moving from lower to higher facility workflow layer tier (e.g., Pilot → Core)

End of definitions.

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