SUMMER INTERNSHIP REPORT

on

Revenue Forecasting for New Bookings

Business in SaaS Companies
at

Cvent India
A report submitted in partial fulfillment of the requirements for the Award
of Diploma of Post Graduate Diploma in Management

in

Finance

by

Palak Mittal
21DM131

Under the supervision of

Faculty Mentor: Dr. Meena Bhatia
Industry Mentor: Mr. Rohit Thakur
Duration: May 2. 2022 – July 2, 2022

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 INDEX
S. No. Topics Page No.
1 Internship completion certificate 3
2 Summer Project certificate 4
3 Letter of Transmittal 5
4 Letter of Authorization 6
5 Acknowledgement 7
6 Executive Summary 8
7 CHAPTER - 1: Company Profile 13
Product Overview 14
Leadership 18
8
Acquisitions 19
Financial Planning & Analysis (FP&A) 22
9 CHAPTER - 2: Literature Review 27
10 CHAPTER - 3: Objective and Scope of the Study 30
11 CHAPTER - 4: Conceptual Framework / Rationale of the study 31
1. Planning, budgeting, & forecasting 31
2. Budget to actual variance analysis in FP&A 32
3. SaaS revenue forecasting 33
4. SaaS forecast stages 36
12
5. Types of revenues in SaaS businesses 37
6. Revenue from new bookings – NBB 39
7. Revenue from existing customers 40
8. Variance 41
13 CHAPTER – 5: Methodology adopted for the analytical study 43
14 CHAPTER – 6: Past Trend Analysis 44
15 CHAPTER – 7: Assumptions 45
16 CHAPTER – 8: Financial Modelling 50
17 CHAPTER – 9: Testing and Analysis 53
18 CHAPTER – 10: Interpretations 60
19 CHAPTER – 11: Conclusions 64
20 CHAPTER – 12: Contributions and Learning from the Project 66
21 CHAPTER – 13: Bibliography 70

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 INTERNSHIP COMPLETION CERTIFICATE

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 SUMMER PROJECT CERTIFICATE

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 LETTER OF TRANSMITTAL

Mr. Rohit Thakur

Cvent India
19th Floor Building,
No.14C, DLF Cyber City,
DLF Phase 2, Sector 24,
Gurugram, Haryana 122002

Dear Sir,

Sub: Summer Internship Project Report

Attached is a copy of my summer-project report “Revenue Forecasting for New Bookings

Business in SaaS Companies” which I am submitting to you in order to mark the completion of
an 8-week summer internship project at your organization. This report has been prepared by me
using the best of practices possible and it completely summarizes the work performed by me on
this project and is being submitted in partial fulfillment of the requirements for the award of the
diploma.

I would like to thank you for giving me this opportunity to serve as a FP&A Intern at Cvent. I
have gained valuable insight into the SaaS Industry and the work FP&A Team does over the
past 2 months.

Being gotten the chance to work on variety of projects and tasks, I had the chance to observe
numerous aspects of Budgeting, Forecasting, and Variance Analysis and various other tasks
FP&A Team performs. You and your team were extremely welcoming and helpful, and offered
me terrific career advice. This internship has definitely increased my interest in pursuing a
career in FP&A.

I hope I did justice to the project and added some value to the organization. Your suggestions or
comments would be appreciated.

Yours truly,
Palak Mittal

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 LETTER OF AUTHORIZATION

I, Palak Mittal, a student at Birla Institute of Management Technology (BIMTECH), hereby

declare that I have worked on the following project during my summer internship at ‘Cvent’, in
partial fulfillment of the requirement for the Post Graduate Diploma in Management program. I
guarantee my study work to be authentic and original to the best of my knowledge in all
respects of the process carried out during the project tenure.

My learning experience at Cvent, under the guidance of Mr. Rohit Thakur, Assistant Manager,
FP&A, Mr. Navneet Rawat, Senior Analyst, FP&A, Mr. Sahil Gupta, Senior Analyst, FP&A,
and Ms. Taruna Nirankari, Senior Analyst, FP&A has been truly enriching.

Date:
Palak Mittal
PGDM Finance
21DM131

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 ACKNOWLEDGMENT

I would like to gratefully oblige the contribution of all the people who took an active part and
provided me with their valuable support during this project. To begin with, I would like to offer
my sincere thanks to Mr. Ankit Jain, Director, FP&A, and Mr. Rohit Thakur, Assistant
Manager, FP&A for allowing me to do my summer training at Cvent Inc. Without their
guidance, support, and valuable suggestions during the study, the project would not have been
accomplished.

My heartfelt gratitude also goes to the entire Human Resource team for their cooperation and

willingness to answer all my queries and provide valuable assistance.

I also sincerely thank Dr. Meena Bhatia, my faculty mentor at BIMTECH, who provided
valuable suggestions, shared her rich corporate experience and helped me script the exact
requisites.

Last, but not the least I would like to thank all the employees of Cvent Inc. for sharing their
experience and giving their valuable time to me during my project.

Palak Mittal

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 EXECUTIVE SUMMARY

Cvent is a leading meetings, events and hospitality technology provider with more than 4,300
employees and nearly 21,000 customers worldwide. Founded in 1999, the company delivers a
comprehensive event marketing and management platform for event professionals and offers
software solutions to hotels, special event venues and destinations to help them grow their
group/MICE and corporate travel business.

The firm’s solutions are aimed at two broad sets of customers -- event planners and venue owners.
This led us to offer two kinds of cloud services in the form of SaaS – the Event Cloud and the
Hospitality Cloud. Cvent’s software solutions optimize the entire event management value chain
and have enabled clients around the world to manage hundreds of thousands of meetings and
events. In addition to helping event planners navigate every aspect of the event process, they also
provide an integrated platform to hoteliers to help create qualified demand for their hotels, manage
that demand more efficiently, and measure their business performance in real-time.

Events are proving to be effective in both the early and late stages of B2B demand generation. In
fact, according to a Demand Gen Report study, in-person events lead the pack among demand
gen tactics for B2B marketers. More than three-quarters (76%) of survey participants named in-
person events as their most successful top of the funnel engagement tactic. Other successful
tactics for top of the funnel demand generation include lead nurturing campaigns (58%),
webinars (58%).

The SaaS industry has grown tremendously over the last few years. Customers prefer a blend of
subscription and usage-based pricing, which allows them flexibility, control, and transparency to
adjust to changing needs and circumstances. It's also well-liked by businesses, as it provides them
the opportunity to scale their business and remain competitive with new and ever-changing
product offerings and modes of monetization.

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 EXECUTIVE SUMMARY

FP&A’s role is to Create a budget for the year. Then, during the year forecast sales, revenue,
expenses with specific performance targets. Track actual performance against targets (budget to
actual variance analysis - BvA). Budget to actual variance analysis is a process by which a
company’s budget is compared to actual results and the reasons for the variance are interpreted.
Finally, Analyze and course correct (Reforecasting).

SaaS companies forecast revenues due to the fact that when a customer starts a subscription, the
new subscription booking is accounted for once the contract is complete. There are also several
other professional services that create revenue for the SaaS business. Another way that a SaaS
business earns revenue is through contract renewals and upsell revenue. Revenue recognition is not
that straightforward in a subscription-based business model.

For a traditional revenue model, the forecasting job is quite simple and easy. You sell a product for
$10 and your revenue is $10. As simple as that. But for a SaaS revenue forecast, you have to take
many factors into account.

Unlike traditional revenue models, payments are not made upfront and customer lifetime value is
not always realized at the outset, which makes it harder to predict revenue and customer lifetime
value. SaaS businesses monitor different revenue streams including new purchases, recurring
revenue, upgrades, and much more. Except for new purchases, all the other revenue streams often
depend on the customer’s experience using the product, and the relationship developed with them
which are unpredictable aspects for SaaS companies.

Accurate revenue forecasting is a critical task for a software company as it helps decision-makers
to correctly allocate financial budgets, adjust priorities, and set revenue and sales goals for the next
year.

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 EXECUTIVE SUMMARY

It’s not surprising that when companies measure forecast accuracy, accuracy trails off the farther
out the horizon. One-month forecasts are more reliable than one-year forecasts. But what is
surprising to The Hackett Group’s Tom Willman and Jason Logman is that so many companies
don’t even measure the process’ performance in terms of forecast accuracy. The majority are not
measuring at an actionable level, said Logman. They are not making that result visible to the
individual BUs and the forecasters and they are not able to make continuous improvements. Once
a company starts measuring forecasts to actuals and holding their executives accountable for the
results, there’s something to talk about.

A SaaS company earns revenues through varied sources. Firstly, Revenues from existing
contracts – MYD: the revenue generated from existing customers. A multi-year deal means a
contract for the purchase of software or services for more than 1 year. Secondly, Renewal
Revenue: the revenue generated from renewal bookings which is the portion of the bookings
attributed to existing customers, whose contracts are up for renewal. At the end of signed
contract, there is an opportunity with client to renew the contract. Thirdly, Revenue from new
bookings - NBB and Upsell Revenue: the portions of bookings that come from net new
customers that have just signed up for the SaaS services. It is the value of a new contract or
subscription signed for a given period. An upsell is when you sell upgrades or additional services
or licenses to your existing customers. Lastly, MRR (Monthly Recurring Revenue): MRR is
the locked in revenue from the contracts which the company has already signed with the
customers and implemented in their CRM (Salesforce) and ERP (Oracle EBS) system. As per the
contracts, the payment terms and billing schedules have been uploaded in the system basis which
the recurring revenue is been plotted in data set.

Now, it is important to link a SaaS company's historical data about its NBB forecasting booking
numbers and understand the variance in the historical years. Based on which, create assumptions
about how a SaaS company forecasts NBB Revenue from NBB forecasted booking numbers, and
project a financial forecast using a model which can bring down the variance and enhance the
efficiency in the financial model of the SaaS Companies. It is important to do Budget vs Actual
Analysis Model for the projection made, and understand the degree of accuracy we are able to
achieve with the new model in comparison to the older model.

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 EXECUTIVE SUMMARY

The NBB revenue is the most inaccurate number while forecasting revenue in SaaS business. The
assumptions are not accurate enough to forecast the revenue from NBB numbers the business
receive from the Sales team.

NBBs forecast is completely based on the inputs from the sales team. They share the monthly NBB
forecast numbers and all these numbers are based on their assumption and analysis. We do not
have any specific date from which those contracts are going to start or what should be the term
(period) of the contract. For the revenue accrual, we were assuming that all the NBBs for the
month would start from mid of the month (average) and their term is 12 months.

To have a created a working and accurate model wherein we have put the bookings number and
analysis will be performed to get the revenue accruals requires a dynamic and exhaustive model
based on many assumptions. The assumptions after analysis has been found that can be Firstly,
Start Date Analysis: This analysis helps understand if some contracts have been closed in a
particular month, then how much of it starts in that month or in upcoming month(s). In the SaaS
business, the start date of a contract can be maximum up to 90 days from the date it was closed. If
it is beyond 90 days, the closed date would be the start date of the contract.

Secondly, Term Analysis: As the name suggests, term analysis is about the period of the
contract. As per one of the booking rules, 1st year of any NBB contract (as it can be a MYD)
cannot be longer than 18 months. So, this assumption implies that if any contract starts at a
specific date, then what is the term possibility of that contract. It can be of 6 months, 10 months,
12 months and can be up to 18 months. Lastly, Conversion Analysis: This analysis implies that
what would be the average start date of a contract closed in a particular month. In this method,
the start month’s revenue will be diluted. For e.g.: term for a contract starting in Jan month is 12
months and the average start date of Jan closed contract is 11th Jan than the revenue in Jan
should be of 21 days and remaining 10 days revenue will fall in Jan of next year.

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 EXECUTIVE SUMMARY

A comprehensive model using these assumptions helps reduce the variance in Budget vs Actuals,
and do forecasting. After forecasting, it is also critical to analyze the actuals and perform a
continuous reforecasting for the coming months to reduce the variance. A rolling forecast is a
management tool that enables organizations to continuously plan (i.e., forecast) over a set time
horizon. The rolling forecast strives to address some of the shortcomings of the traditional budget.
Specifically, the rolling forecast involves a re-calibration of forecasts and resource allocation every
month in the SaaS business. Reforecasting your budget regularly can be an effective strategy to
avoid unwanted costs. Reforecasting also allows you to adapt to unexpected events that may
disrupt your cash flow.

By understanding the funnel of the previous months and analyzing whether the funnel was
understated or overstated, the reforecasting can be done accurately on the basis of the results of the
analysis. If, among the total funnel remaining to reach the budget numbers, the open funnel at
different dates of the month in the multiple of 5, aka, Dump Dates is less than 100%, we say the
funnel is understated and if it is more than 100%, we say the funnel is overstated. Such analysis
and data interpretation can be used effectively to reforecast the future numbers basis, whether the
funnel was understated or overstated in the previous months and by what percentage.

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 CHAPTER 1 - INTRODUCTION
COMPANY PROFILE

Cvent Holding Corp. (Nasdaq: CVT)

is a publicly held software-as-a-service
(SaaS) company with its headquarters
in Virginia. The company is an
epitome for providing meetings,
events, and hospitality
management technology. The
company owe its success to its
charismatic leadership and a huge
manpower of over 4,000 employees.

Founded in 1999 Cvent works to maximize the outcome

Founder and CEO, Reggie Aggarwal and the impact the events can bring
Headquarters in Tysons Corner, Virginia through automating, simplifying and
(D.C. metro area)
increasing the efficiency of entire
More than 4,000 employees worldwide
event management processes by their
21,000+ customers globally
comprehensive and enriched suite of
280,000+ hotels and venues listed on the
solutions they provide to their clients.
Cvent Supplier Network

The company has curated impressive web-based software solutions for day-to-day personal and
corporate events. The clients can easily manage personal, virtual, and even hybrid events by using
their innovative software solutions. The suite of web-based software solutions includes numerous
services which start from event registration, selection of venue, event marketing and promotions,
event planning and management to audience engagement.

The enterprise also has provisions for managing group-based or professional corporate tours or
travel businesses while gaining attraction through their sourcing avenues.

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 PRODUCTS OVERVIEW

Cvent provides a wide suite of software web-based solutions which are making the lives of
people easier and more efficient through their SaaS solutions. They are gaining an enormous
amount of attention and trust in the event management industry and market. Also, Cvent has got
itself a unique position in the eyes of its customers in the Event Management market owing to
the first-mover advantage as well. It is interesting to know that global event management market
is as big as $1 trillion.

The web-based software solutions are used by more than 80% of the Fortune 100 firms and
more than 50% of the Fortune 500 companies. With customers such as MetLife, Wells Fargo,
The Coca-Cola Company and Procter & Gamble, the company has around 25,000 enterprises as
its clients.

The firm’s solutions are aimed at two broad sets of customers -- event planners and venue
owners. This led us to offer two kinds of cloud services in the form of SaaS – the Event Cloud
and the Hospitality Cloud.

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 CVENT'S EVENT CLOUD

The Cvent Event Cloud offers software solutions to event planners and marketers for online
event registration, venue selection, event management and marketing, onsite solutions, and
attendee engagement. Cvent's suite of products automate and simplify the planning process to
maximize the impact of events. The Cvent Hospitality Cloud partners with hotels and venues to
help them drive MICE and corporate travel business.

These solutions help planners view multiple venues after a proposal for the event requirement is
submitted following budget approval. It acts just like a search with filters that meets your
requirements as a customer. Our suite of products automates and simplify the planning process
to maximize the impact of events.

These solutions also include event management functions such as understanding how many
people in total attended the event, how many people attended specific sessions of the event and
how many people moved from one zone of the event to the other.

This helps the company arranging the event to gain insights into the event. They can learn about
what kind of people attended and what exactly they were interested in the event and then later
can make marketing or sales pushes accordingly. This, can be either achieved through facial
recognition techniques at venues or by simply scanning badges at different zones at the venue.

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 CVENT'S EVENT CLOUD

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 CVENT'S HOSPITALITY CLOUD

The Hospitality Cloud partners with hotels and venues to help them drive their group and
corporate travel business.

Hotels use the Hospitality Cloud's digital marketing tools and software solutions to win business
through Cvent's sourcing platforms and to serve their customers directly, efficiently and
profitably – helping them grow and own their business.

For hospitality professionals, Cvent has launched a lead scoring tool, which applies machine
learning and artificial intelligence to help venues and hotels prioritize, evaluate, and route
requests for proposals (RFPs) that planners send.

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 LEADERSHIP

Reggie Aggarwal: CEO and Founder. Reggie attended the

University of Virginia and graduated with a degree in finance.

Reggie graduated from Washington and Lee University School

of Law in 1994 with a Juris Doctor degree, after which he
worked as an attorney specializing in the M&A and IPO
process. Prior to co-founding Cvent in 1999, Reggie served as
the president of the Indian CEO Network.

Chuck Ghoorah: Co-Founder, President of Worldwide Sales

and Marketing. Ghoorah has been instrumental in Cvent’s
growth from a two-person startup to a 3,000+ person company.
To date, Cvent has helped more than 25,000 customers manage
hundreds of thousands of events.

David Quattrone: Co-Founder, Chief Technology Officer.

David Quattrone has been with Cvent since the company's
founding, bringing a wealth of expertise in designing and
developing large-scale Internet applications. He now leads a
technology team of 1,400+ employees around the world.

Billy Newman: Chief Financial Officer, Senior Vice President.

He is responsible for all finance and procurement activities at
the company. He brings more than 20 years of experience in
providing executive finance leadership to technology
companies.

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 ACQUISITIONS

On June 13, 2012, Cvent announced the acquisition of Austin-based startup Crowd Torch,
previously known as Seed Labs, for $4.2 million. On December 7, 2015, Vendini announced
they acquired Crowd Torch from Cvent.

On June 19, 2012, Cvent announced its acquisition of Portland-based application developer
Crowd Compass for $10 million.

On May 23, 2018, Cvent announced that it had acquired Quick mobile, a Vancouver-based
mobile event app developer.

On June 5, 2018, Cvent announced that it had acquired Kapow, an online booking platform for
venues and experiences. Cvent has since sold Kapow, which is currently a division of Hello!
Destination Management.

On October 16, 2018, Cvent announced that it had acquired Social Tables, an event
diagramming, seating, and collaboration platform based in Washington, D.C.

On May 22, 2019, Cvent announced that it had acquired Wedding Spot, a wedding venue
sourcing platform that allows users to find venues based on budget, location, style, and guest
count. At the time of the acquisition, Wedding Spot, which was founded in 2013 in San
Francisco, California, had partnerships with over 12,000 venues across the United States.

On June 10, 2019, Cvent announced that it had acquired mobile event technology provider
Double Dutch.

On July 20, 2021, WSJ reported that Cvent Nears $5-Billion-Plus SPAC(DGNS) Deal

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 THE MEETINGS & EVENTS ECOSYSTEM

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 Most Successful B2B Demand Generation Tactics is through In-
Person Events, Webinars, and Virtual Conferences

CVENT'S RESULTS

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 FINANCIAL PLANNING AND ANALYSIS (FP&A)

FP&A’s primary responsibility is to connect senior management’s long term strategic plan to
reality. The strategic plan is a top-down, senior management driven document that sets high-
level targets (revenue, sales, net income, core strategic initiatives, etc.) for the firm anywhere
from 1-5 years in the future. FP&A’s job is to develop the operating and financial plan required
to achieve management’s strategic plan. This process is also known as corporate performance
management.

Historically, this meant that FP&A would develop a largely static annual budget that updates
once each year. However, since static budgets get stale quickly, FP&A teams are increasingly
tasked with the development of a rolling forecast, either in parallel with the traditional budget
or altogether as a replacement.

As a key part of the forecasting process, FP&A teams conduct variance analysis to show
management how the budget and/or rolling forecast compares against actual performance.

FP&A not only reports forecasts and variances but also uses that data to advise management on
decisions such as how to improve performance, minimize risk or capture new opportunities
from both within the company and within the external environment. To this end, the FP&A
team is typically charged with the creation of a monthly CFO or Senior Management book that
usually provides:

• Analysis of historical financials

• Variance explanations
• An updated forecast with risks and opportunities to current plan
• Key Performance Indicators (KPIs)

At its best, the report provides the CFO with enough information to answer key questions from
external stakeholders and may identify various levers that can be pulled to optimize
performance or meet certain goals.

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 ORGANIZATION- FP&A

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 WHAT IS FINANCIAL PLANNING & ANALYSIS
(FP&A)?

Financial planning and analysis (FP&A)

is a group within a company’s finance
organization that provides senior
management with a forecast of the
company’s profit and loss (income
statement) and operating performance for
the upcoming quarter and year. These
forecasts inform management on the
progress and effectiveness of the
company’s strategic plans and
investments. They also enable
management to communicate with
external stakeholders.

Financial Planning & Analysis within the corporate finance hierarchy

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 THE ROLE OF THE FP&A
PROFESSIONAL

FP&A teams typically reports directly to the CFO. Here’s how these groups fit together-

Controller
The controller is broadly in charge of the company’s financial accounting. This role is therefore a
primarily historical record-keeping function that ensures that a company’s books are in order. Key
tasks include overseeing the company’s financial reporting and regulatory requirements. Tax
reporting usually falls under this umbrella or as a separate function under the CFO altogether.

Treasury
Treasury manage the cash, debt and equity of the company. Key tasks include managing the
company’s liquidity and financial investments, optimizing the company’s capital structure and
overseeing the company’s debt and equity issuances.

Financial Planning and Analysis (FP&A)

If the controller is tasked with making sure all the historical numbers are in order (i.e., financial
accounting), the FP&A team is tasked with ensuring the forecasts are in order (managerial
accounting). Specifically, the group is primarily charged with planning, i.e., it produces the
budget and periodic forecasting to aid senior management in decision making.

As you might imagine, the task of forecasting a company’s financials requires both an
understanding of the company’s historical performance as well as an understanding of the key
assumptions and trends that may impact future performance. This requires a broad understand of
both accounting and business operations. As a result, FP&A teams are in frequent contact with all
areas of the enterprise including operations, sales, marketing, treasury and accounting. FP&A’s
role as the eyes and ears of the organization makes it a central liaison between the corporate and
operations teams. As such, FP&A interfaces with the CEO as well as the CFO.

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 THE ROLE OF THE FP&A
PROFESSIONAL

FP&A CAN DIRECTLY IMPACT A COMPANY’S SHARE PRICE

For public companies, the role of FP&A is particularly important because management teams
often provide revenue and net income guidance to shareholders based on the budget and
forecasts prepared by the team. Getting these forecasts wrong not only prevents management
from accurately allocating resources and achieving its strategic plan, but also has a direct &
immediate impact on a company’s share price.

Often company's shares plunge drastically when the company is not able to achieve the prior
quarter’s forecast (guidance) that it provided to investors.

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 CHAPTER 2 - LITERATURE REVIEW

COVID-19 and other recent changes around the globe has made global economy more
unpredictable and has led to a dynamic shift with an intense momentum making it really
important for Finance professionals to prioritize Forecasting & Planning to survive (Metcalf
& Gupta, 2021). KPMG reports have identified Financial Planning & Analysis (FP&A) as the
core area for improvement and success (Esssaides, 2013). Financial Planning and Analysis, if
done properly and efficiently helps in cost savings, economies of scale, better reputation,
goodwill, and even increase in market share (Singh, 2020). Planning is the most important
part for any business to retain and expand its share in the market with wider competition and
globalization (Mehta, 2018). However, it is still evident that still a lot of companies have not
actually bridged the gap between perceptions, planning and actual action and execution,
which can be linked with a lot of hurdles available in the process. The FP&A process relies
on data, extensive interviews, expert survey opinions, and observations of professionals.
Also, with drastic changes in the trends has made Financial forecasting across all industries
even more difficult than previous decades, with no evidence of it becoming any easier in
future (Esssaides, 2013).

The paradigm shift in financial planning and analysis has made the traditional statistical,
planning and analytical models obsolete. There is a need for more dynamic, flexible,
rational, and, improvised modern Financial Planning & Analysis functions. Traditional
models were based on past and may helped in looking where the company was, however,
help very little in keeping the current business on track. Also, it is of no or very little
importance for other stakeholders other than accountants. Business enterprises should
evaluate their previous models and redesign accordingly and combine the key performance
indicators from across all the departments for a holistic view (Alexander, 2018; Réka et al.,
2014). Also, it’s a thing of the past when role of finance department was strictly limited to
bookkeeping and making of financial statements. Now, academicians and practitioners are
highlighting the need for modern financial planning and analysis skills which goes beyond
budgeting, which gives rise to new and more difficult hurdles in the success of companies
(Miller & Galeaz, 2007).

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 LITERATURE REVIEW

Business professionals should be encouraged to act pro-actively and even adopt business
partnering to gain competitive advantage in the times of Black Swan changes. No doubt
financial forecasting, budgeting, revenue planning, financial planning, and overall analysis is
a tedious and difficult task for even small firms (Mehta, 2018).

Finance Professionals use and analyze data all the time for efficient budgeting and
forecasting. For this, proper screening and protection of data is must. Also, there is a great
need for companies to create artificial intelligent and tech-enabled platforms for employees to
keep track of previous and present data for proper analysis and decision making (Fernando
Da Costa & Coelho, 2022). FP&A provide insights about allocation of resources timely and
efficiently with minimum cost and wastage. It also acts as a tool for managers to be act
proactively and make better financial decisions in day-to-day events of the company. FP&A
doesn’t only help to manage cash flows in advance, but also make better investment decisions
in the future (Singh, 2020).

(Wyatt, 2012) outlines the importance of keeping in mind the Organization’s goals and
objectives before proceeding to any budgeting, financial planning and analysis or any
financial decisions. Goal Congruence is must to avoid any ambiguities and future delays or
conflicts. Also, CFOs and FP&A professionals should design performance measures which
give rise to a corporate mindset among other employees be it managers or executives. Thus,
the author majorly recommends including a holistic approach and encourage ideas and
reporting of identified opportunities from managers as well.

Financial Planning involves the crucial step of budgeting i.e. forecasting the company’s
revenues, incomes and expenses in near future while taking care of the liquidity position of
the company (Dempsey & Kelliher, 2018). The finance professionals analyze the cash flows
and allocate them to specific functions within the perspective of organization’s goals and
objectives. The whole FP&A process requires careful analysis and interpretation of data and
development of well-defined policies and strategies for smooth functioning of the company.

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 LITERATURE REVIEW

FP&A professionals are responsible for understanding and analyzing the reasons for
discrepancies and take necessary actions and even report them to all the stakeholders of the
company. Thus, they not only perform the function of Planning and Analysis only, but also
communicate the trends to the external and internal stakeholders (Singh, 2020).

Chief Financial Officer (CFO) and Financial Planning and Analysis (FP&A) professionals
are required to look after a lot of functions like FP&A and Performance management areas
along with providing though-provoking ideas, budgeting, financial reporting and
communication, and, careful investigation of financial data and forecasting, achieving
organizational goals and objectives, projecting future financial performance, increasing
visibility, and, allowing managers to take decisions and also being answerable to it. They are
also expected to make continuous improvements in their decision making catering to the
evolving trends in economic, political and other internal/external factors affecting the
company’s business (Alexander, 2018). The author also highlights the key points that CEOs
expect and look in CFOs: Credible and reliable forecasts, careful and hard-headed analysis,
capability of leading company growth, and, leadership qualities along with teamwork.

There is no doubt that there is a need for a change, with modern FP&A the future.

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 CHAPTER 3 - OBJECTIVE AND SCOPE OF THE
STUDY

(1) link a SaaS company's historical data about its NBB forecasting booking numbers and
understand the variance in the historical years,

(2) create assumptions about how a SaaS company forecasts NBB Revenue from NBB
forecasted booking numbers,

(3) project a financial forecast using a model which can bring down the variance and
enhance the efficiency in the financial model of the SaaS Companies,

(4) Budget vs Actual Analysis Model for the projection made, and

(5) understand the degree of accuracy we are able to achieve with the new model in
comparison to the older model.

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 CHAPTER 4 - CONCEPTUAL FRAMWORK

PLANNING, BUDGETING, & FORECASTING

1. Create a budget for the year.

2. Create a forecast with specific performance targets.
3. Track actual performance against targets (budget to actual variance analysis - BvA).
4. Analyze and course correct (Reforecasting).

Planning, budgeting and forecasting is typically a three-step process for determining and
mapping out an organization’s short- and long-term financial goals:

Planning provides a framework for a business’ financial objectives — typically for the
next three to five years.

Budget creates a baseline to compare actual results and determine how the results vary
from the expected performance. It is set annually and locked down at the beginning of the
year. Budgeting details how the plan will be carried out month to month and covers items
such as revenue, expenses, potential cash flow and debt reduction.

Actuals are captured monthly and are recorded in company's GL. They are used to
measure actuals against budget.

Forecasting takes historical data and current market conditions and then makes predictions
as to how much revenue an organization can expect to bring in over the next few months.
Forecasts are usually adjusted as new information becomes available.

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 BUDGET TO ACTUAL VARIANCE ANALYSIS IN
FP&A

Budget to actual variance analysis is a process by which a company’s budget is compared to

actual results and the reasons for the variance are interpreted.

Variances fall into two major categories:

1. Favorable variance: Actuals came in better than the measure it is compared to.
2. Negative variance: Actuals came in worse than the measure it is compared to.

Variance to prior period and same period prior year

Taking the classic variance analysis one step further, an analyst can compare actuals to the
period immediately prior and to the same period the prior year. Analyzing variances in this way
will help bring to light potential changes in seasonality and timing changes that can help to
correct future forecasts.

Year-to-date (YTD) and forecast

1. How are we tracking against budget/plan so far?
2. Are we going to hit, miss or exceed our annual targets based on new information?

To do this, the analyst needs to compare YTD actuals against YTD budget/plan as well as the
full year budget/plan against the full year updated forecast.

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 SAAS REVENUE FORECASTING

The SaaS industry has grown tremendously over the last few years. Customers prefer a blend of
subscription and usage-based pricing, which allows them flexibility, control, and transparency
to adjust to changing needs and circumstances. It's also well-liked by businesses, as it provides
them the opportunity to scale their business and remain competitive with new and ever-
changing product offerings and modes of monetization.

It can be difficult to accurately forecast cash flows for SaaS businesses due to different types of
pricing and billing approaches often used in SaaS business models.

Revenue recognition is not that straightforward in a subscription-based business model. For a

traditional revenue model, the forecasting job is quite simple and easy. You sell a product for
$10 and your revenue is $10. As simple as that. But for a SaaS revenue forecast, you have to
take many factors into account.

Unlike traditional revenue models, payments are not made upfront and customer lifetime value
is not always realized at the outset, which makes it harder to predict revenue and customer
lifetime value. SaaS businesses monitor different revenue streams including new purchases,
recurring revenue, upgrades, and much more. Except for new purchases, all the other revenue
streams often depend on the customer’s experience using the product, and the relationship
developed with them which are unpredictable aspects for SaaS companies.

Accurate revenue forecasting is a critical task for a software company as it helps decision-
makers to correctly allocate financial budgets, adjust priorities, and set revenue and sales goals
for the next year.

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 WHAT IS A SAAS REVENUE FORECAST?

A SaaS revenue forecast is an estimate of the total revenue the business will generate monthly
over a certain period. SaaS companies track their growth by analyzing their monthly recurring
revenue (MRR).

Monthly Recurring Revenue (MRR) is the most important metric and serves as the foundation
for SaaS revenue forecasting. Tracking the MRR allows SaaS businesses to understand whether
the revenue is growing, declining, or at a standstill. Keeping track of this trend helps the
business owners make sales predictions and make budget adjustments accordingly. It's also an
important metric for investors, as it allows them to forecast the predictive revenue stream.

Annual recurring revenue (ARR) is also a determining factor for revenue forecasting as it is
dependent on the net new customers acquired and the retention of existing customers.

For a B2B SaaS business forecasting answers several questions like - Are they going to meet
their business objectives? Do they need more cash? Are they able to hire new employees? Etc.

There are several factors that are considered while creating a revenue forecast model which
include - market conditions, sales pipeline, past financial performances, etc.

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 TOP - DOWN VS BOTTOM - UP FORECASTING

Top - Down Forecasting will usually Bottom - Down Forecasting

be performed in the following way: will be done in the following

way:

Sometimes senior management can be unhappy with the preliminary sales forecast
(Bottoms up), believing the company should aim higher.

The senior management makes a top-down estimate while each division forecasts
through the bottoms-up method. Usually, the two sides reach a compromise that's
between the two forecasts.

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 SAAS FORECAST STAGES

SaaS businesses suffer from issues like lack of quantifiable data, as the last year’s results cannot
be treated as a yardstick to gauge next year’s results. To combat this issue, software businesses
depend on expert opinion. However, there are some basic forecast strategies that SaaS
companies can follow. Instead of forecasting based on the sales stage, FP&A team uses data
from Salesforce and can work off a common set of definitions based on something called the
Opportunity Stages. Opportunity Stage relate to the probability of an opportunity closing at a
certain time and its predicted value. Following are the common Opportunity Stages:

Closed Won - 100% - These are the opportunities or deals that have been closed and
orders are already processed.

Legal - 95% - These are the opportunities in which the sales teams are actively engaged in
conversations with the prospects, and they are highly confident that these will close and
just some legal process is pending.

Verbal - 80% - These are probable opportunities because the sales teams are confident that
they would be able to win these opportunities and the prospect has already given their
verbal commitment.

Opportunity Identified - 50% - These are the opportunities that have been identified by
the sales team and now will work on it.

MYD created - 99% -These are opportunities with projected close dates beyond the
current quarter.

Up for Renewal - 50% - These are existing contracts of the clients which are about to end

and there is a possibility of the client renewing the services again for out years.

Closed Lost - 0% - These are the deals that are lost i.e., the prospect is no longer
considering your company.

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 TYPES OF REVENUES IN SAAS BUSINESSES

SaaS companies forecast revenues due to the fact that when a customer starts a subscription, the
new subscription booking is accounted for once the contract is complete. There are also several
other professional services that create revenue for the SaaS business. Another way that a SaaS
business earns revenue is through contract renewals and upsell revenue.

Therefore, the revenue sources that need to be incorporated into revenue projections are:

1. Revenues from existing contracts - MYD

2. Renewal Revenue - Renewal
3. Revenue from new bookings - NBB and Upsell Revenue
4. MRR (Monthly Recurring Revenue)

1) Revenue from existing contracts - MYD - Multiyear deals

This is the revenue generated from existing customers. A multi-year contract means a contract
for the purchase of software or services for more than 1 year. Details for each year like start-end
date, fee for each year, etc. are mentioned on the contract. Contract close date determines the
Sales recognition.

Each existing contract will have a revenue schedule, which typically runs only through the end
of the present term.

For all contracts with next year falling within your projection period, you must create
projections, which can easily be made through MYD Funnel in the CRM tool; Salesforce. For
these projections, you must create a revenue schedule.

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 TYPES OF REVENUES IN SAAS BUSINESSES

2) Renewal Revenue
Renewal revenue is generated from renewal bookings which is the portion of the bookings
attributed to existing customers, whose contracts are up for renewal. The renewal bookings are
usually calculated at the time of the effective renewal date or when a renewal request is received.
At the end of signed contract, there is an opportunity with client to renew the contract.

For all contracts expiring within your projection period, you must create projections which can be
tracked through open renewals that are created in the CRM tool; Salesforce. For these
projections, you must create a revenue schedule. Projections are typically created using a simple
renewal rate or churn number. A more sophisticated approach is to use different renewal rates for
different segments.

3) New Bookings - NBB

Booking is an important metric for SaaS businesses. It represents the portions of bookings that
come from net new customers that have just signed up for the SaaS services. It is the value of a
new contract or subscription signed for a given period.

3) Upsell Revenue
An upsell is when you sell upgrades or additional services or licenses to your existing customers.
Upsells are a critical component of SaaS revenue. Upsells are also good for customer retention
and show that you have satisfied customers that get value out of your services. Such revenue is
considered as NBB.

4) Monthly Recurring Revenue - MRR

MRR is the locked in revenue from the contracts which the company has already signed with the
customers and implemented in their CRM (Salesforce) and ERP (Oracle EBS) system. As per the
contracts, the payment terms and billing schedules have been uploaded in the system basis which
the recurring revenue is been plotted in data set.

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 REVENUE FROM NEW BOOKINGS - NBB

NBB are the major source of revenue that can be leveraged to generate bigger revenues. There
are multiple factors at play while forecasting this SaaS revenue:

Start with past performance

You must begin with analyzing the past performance for making any future projection.
Bring out all the numbers that you have in your historical records.

Analyze your Sales Pipeline

Your sales pipeline is a clear indicator of how much revenue you can expect to generate in the
near future. You should have a previous record of the number of customers who were at one or
the other stage as your current potential customers. Based on their conversion rate in the past,
you can predict the same for this year.

Measure the marketing and sales performance

A good way to forecast the revenue of the business also comes from the knowledge of your
sales and marketing performance. How effectively have they been able to achieve their targets
in the previous year? What is the current status of their targets? Have there been any new hires
or attrition in the team? Has the sales and marketing team started using some new automation
tools that have increased their efficiency? If yes, then can you quantify it?

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 REVENUE FROM EXISTING CUSTOMERS

There are mainly two components for the existing customers that are the main sources of
revenues. They are contract renewals and additional sales.

Measure the probability of renewals

Based on early indicators, you must know in advance how many customers are likely to renew
their contracts in the coming quarters or year. Consider the indicators like adoption rate, CSAT
score, NPS score and so on for forecasting subscription revenue. These will give you a good
sign whether they are going to bring in more recurring revenue or not.
Do not forget to include the number of new customers that are getting added in each quarter in
the recurring revenue list.

Consider add-on sales

Revenues from existing customers in SaaS keeps on growing with time. This is the beauty of
SaaS business model. The growth comes from sources like:

Upgrade of subscription plan from licenses for x number of users to more.

Upgrade to a higher version product.
Additional purchase of another ancillary product.
Increment in the product pricing.

The best way to predict your revenue forecast for add-on sales is to find the growth rate of your
customer cohort in revenues in the past years. If two years ago, the growth rate was 5%, and last
year it was 6%, then you can extrapolate it for the future taking the compounded effect in the
growth rate.

Do not forget to include churn

Although churn is the most dreaded devil in your SaaS business, you cannot ignore it in your
SaaS revenue forecast. If you are considering the factors influencing your revenue growth, you
have to also consider those that amount to its depletion. Analyzing the overall ARR with churn
rate for the past years would allow you to know its percentage effect on future earnings. The
overall revenue through existing customers’ contract renewals must be adjusted with churn rate
to arrive at a more precise estimate.

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 VARIANCE

Now we need to look for the major reason(s) of variances. Following are the analysis for the
above components:

MRR is the data which we pull out from the EBS (accounting tool). This is the most accurate
data as these contracts have already been signed, active and accrual is based on accounting
standards.

MYDs are the contracts which are already been signed but future years of the contract is not yet
active in accounting tool. For MYDs, we pull the data from Salesforce. Revenue from these
contracts is also very accurate as the term of each year has already been defined in signed
contract and so is the revenue accrual.

Renewals is one of the volatile components as it completely based on assumptions and inputs of
the sales team. Sales team provide their inputs to FP&A that how much we will close from the
open opportunities in forecasted months. The revenue calculation from these contracts is also
correct (basis Sales team input) as we already have a model to calculate the revenue from
renewals. Also, Cvent has booking rule of signing a renewal where the 1st year of that contract
should be of 12 months only, not lower or higher than that. This helps us to forecast revenue
very accurately as we have a pretty good idea of future revenue accrual. However, if the
renewal contract value is higher or lower than the inputs of sales team, it will impact both the
sales and revenue forecast. We cannot control this aspect of renewal forecast.

NBBs forecast is completely based on the inputs from the sales team. They share the monthly
NBB forecast numbers and all these numbers are based on their assumption and analysis. We do
not have any specific date from which those contracts are going to start or what should be the
term (period) of the contract. For the revenue accrual, we were assuming that all the NBBs for
the month would start from mid of the month (average) and their term is 12 months.

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 OBSERVATIONS

After comparing this forecasted accrual with the actual NBB revenue for 2-3 months, it was
analyzed that NBB revenue is the most inaccurate number while forecasting in SaaS business.
The assumptions are not accurate enough to forecast the revenue from NBB numbers the
business receive from the Sales team.

The paper ahead will focus on creating the correct assumptions and forecasting model for the
NBB revenue to eliminate the inconsistency and variance as much as possible.

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 CHAPTER 5 - METHODOLOGY

I have used the hypothetical historical data of a SaaS Company, and done the analysis on those
numbers. Then I have used excel to create a new Financial Model to create a new Financial
Model.

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 CHAPTER 6 - PAST TREND ANALYSIS

Till now we have analyzed the actual reason of variance and decided to do some fact checks for
the past period NBB revenue. I have pulled out the month-on-month NBB bookings (sales) of
previous 3 years and spread out the revenue basis the Start and End date of the contract.

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 CHAPTER 7 - ASSUMPTIONS
NBB TO REVENUE

I came across the below mentioned analysis which need to be done on NBB sales numbers:

a) Start Date Analysis

b) Term Analysis
c) Conversion Analysis

a) Start Date Analysis

This analysis helps understand if some contracts have been closed in a particular month, then
how much of it starts in that month or in upcoming month(s).

In the SaaS business, the start date of a contract can be maximum up to 90 days from the date it
was closed. If it is beyond 90 days, the closed date would be the start date of the contract.

Let's try to understand this with an example, if we have signed a contract with client on 30th
Jan’22 and the services supposed to start from 30th Apr’22 then the closed date would remain
the same.

However, if the start date is 15th May’22 then the closed date would be changed to 15th
May’22. Basis this I came up with the below 4 categories for this analysis:

Start date in Same Month

Start date in Same Month + 1
Start date in Same Month + 2
Start date in Same Month + 3

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 NBB TO REVENUE

Let's try to understand this table, by using a pivot I have come up with the following figures,
and its evident that the NBB Bookings in the historical data have their Start Dates in the 4
categories as mentioned.

Also, we can see that maximum of the contracts start in the same month of their closing. Very
small percentage of contracts are actually starting 2 months after their closing.

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 NBB TO REVENUE

b) Term Analysis

As the name suggests, term analysis is about the period of the contract. As per one of the
booking rules, 1st year of any NBB contract (as it can be a MYD) cannot be longer than 18
months. So, this assumption implies that if any contract starts in Jan’21 than what is the term
possibility of that contract. It can be of 6 months, 10 months, 12 months and can be up to 18
months. Below is an example of this analysis.

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 NBB TO REVENUE

c) Conversion Analysis

This analysis implies that what would be the average start date of a contract closed in a
particular month. In this method, the start month’s revenue will be diluted. For e.g.: term for a
contract starting in Jan month is 12 months and the average start date of Jan closed contract is
11th Jan than the revenue in Jan should be of 21 days and remaining 10 days revenue will fall in
Jan of next year.

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 NBB TO REVENUE

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 CHAPTER 8 – FINANCIAL MODELLING

Assumptions based on the above 3 analyses have been applied on the NBB sales forecast so that
we can be more accurate with the revenue spread. However, to get this streamlined we need to
create a NBB to revenue model for the same

To create the model, I have started with the start date analysis as both the other analysis will be
based on the start date data. Using this analysis, we got the start month of the NBB closed in a
particular month.

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 FINANCIAL MODELLING

After the start date analysis, we have the bookings based on start month. Now we can apply
both the Term and Conversion analysis in order to get the revenue accrual.

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 FINANCIAL MODELLING

Creating this model was a bit challenging as I had to create a waterfall so that the revenue can
be calculated accurately. It wasn’t just dividing the revenue on the term of given period, but the
conversion needs to be applied on same. I have created a working and accurate model wherein
we have put the bookings number (based on start date analysis) and analysis will be performed
to get the revenue accruals. Below is the screenshot for your reference.

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 CHAPTER 9 – TESTING AND ANALYSIS

VARIANCE ANALYSIS (BvA)

HOW TO IMPROVE ACCURACY

It’s not surprising that when companies measure forecast accuracy, accuracy trails off the
farther out the horizon. One-month forecasts are more reliable than one-year forecasts. But what
is surprising to The Hackett Group’s Tom Willman and Jason Logman is that so many
companies don’t even measure the process’ performance in terms of forecast accuracy. The
majority are not measuring at an actionable level, said Logman. They are not making that result
visible to the individual BUs and the forecasters and they are not able to make continuous
improvements. Once a company starts measuring forecasts to actuals and holding their
executives accountable for the results, there’s something to talk about.

Even when companies measure accuracy, they don’t always measure it in a way that tells them
something about the process. They look at one-month forecast vs. actuals and do a variance
analysis. Consequently, many reports have variance to actuals for one-month or one-year
forecasts. That’s an aspect of forecast accuracy, said Logman. If there’s a big gap it can raise
important questions. But it’s not a measure of forecast process excellence. Instead, or in
addition, companies could look at the evolution of a rolling forecast over time: was the new
forecast better than the old one?

Ideally forecast accuracy for revenue, earnings and cash flow is measured and tracked not only
for the current period but also for the current quarter and on a 12-month rolling basis (e.g., in
January what was the forecast for December and how accurate was it?). These measures of
accuracy should be built into executives’ individual goals and objectives to drive focus and
improve the process.

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 ROLLING FORECAST

A rolling forecast is a management tool that enables organizations to continuously plan (i.e.,
forecast) over a set time horizon. For example, if your company produces a plan for calendar
year 2022, a rolling forecast will re-forecast the next twelve months (NTM) at the end of each
quarter. This differs from the traditional approach of a static annual forecast that only creates
new forecasts towards the end of the year:

The rolling forecast approach is a continuous rolling 12-month forecast, while the forecast
window in the traditional, static approach will continue to shrink the closer it gets to year end
(the fiscal year cliff).

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 ROLLING FORECAST
VS
TRADITIONAL BUDGET

The traditional budget does not react to what is actually happening in the business during
the forecast.

The traditional budget process can take up to 6 months at large organizations, which requires
business units to guess about their performance and budget requirements up to 18 months in
advance. Thus, the budget is stale almost as soon as it’s released and becomes more so with
each passing month.

Rolling forecast

The rolling forecast strives to address some of the shortcomings of the traditional budget.
Specifically, the rolling forecast involves a re-calibration of forecasts and resource allocation
every month in the SaaS business.

Excel remains the day-to-day workhorse in most finance teams. For larger organizations, the
traditional budget process usually involves building the forecast in Excel before loading them
into an enterprise resource planning (ERP) system.

As new data comes in, not only do firms need to perform a budget to actuals variance analysis,
but they also need to re-forecast future periods.

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 ROLLING FORECAST

That’s why a rolling forecast requires an even more carefully constructed relationship between
Excel and the data warehouses/reporting systems than that of a traditional budget process.

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 BUDGET VS ACTUALS

A budget represents the financial metrics that the company is expected to hit throughout the year.
These numbers include sales, revenue, expenses, and any other metrics.

Think of the budget as the target numbers you expect your company to hit. On the other hand,
actuals are the real numbers your company has hit. They’re not what you’re forecasting to hit, or
what you’re aiming to hit—they’re the reality.

In short, your budget represents the numbers your company expects to hit, while actuals are the
numbers you’ve achieved.

When combined with your financial forecast, this is what each represents:
Budget: What your company expects to achieve
Actuals: What your company actually achieved
Forecast: What your company is projected to achieve in the future based on past data

This means that, unlike a budget or forecast, you cannot plan your actuals before they happen. You
can only analyze them once you have the data of a completed time period.

Reforecasting your budget regularly can be an effective strategy to avoid unwanted costs.
Reforecasting also allows you to adapt to unexpected events that may disrupt your cash flow.

More frequent re‐forecasting is becoming an important topic on corporate agendas and is seen by
many to be the only way to keep financial performance on track at a time when revenues are
becoming less predictable. The paper aims to investigate this topic now.

The results show that most organizations remain dissatisfied with the frequency with which they
re‐forecast and wish to re‐forecast more frequently. However, the findings also show that many
organizations feel that they cannot re‐forecast as often or as quickly as they would like. In fact,
evidence suggests that little, if any, progress has been made during the last few years. This is due
to either the amount of time it takes operational line managers to re‐forecast their resource
requirements, or the amount of time it takes the finance function to complete a round of re‐
forecasting. The type of application used for budgeting and re‐ forecasting appears to make little
difference to the time it takes organizations to produce an annual budget or complete a re‐forecast.

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 FORMULAS USED IN
BvA MODEL

To get started with the model, following steps have been followed: To prepare a model I have
created various drop downs on the basis of the monthly raw data on bookings.

For Region I made different bifurcations as shown for studying the actuals on the basis of
different regions if required. Global considers the consolidated region.

Below are mentioned different start dates which are the lower limit from which we want to
analyze the data for actuals against the budget. Similarly, the end date represents the upper limit
to the month which we want to analyze in the range of.

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 FORMULAS USED IN
BvA MODEL

Role represents the two different roles in the Sales and Marketing team who would have
contributed towards the sales of NBB Booking Numbers. DS is the Direct Sales and AM is the
Account Manager.

Team represents the different teams a SaaS Event management company has under its products.

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 CHAPTER 10 - INTERPRETAIONS

An extensive nested formula has been used to spread the numbers for different product families
and different dump dates, having filters on the drop downs created.

Product column shows the list of different products for which we are doing the analysis. The
numbers in column headers - 5, 10, 15, 20, 25, 30, EOM represents the different dates at which
we have gathered and calculated the data for in a month. These dates are called here as Dump
Dates. The dump 5 signifies that the report for the open funnel was pulled out of CRM Software,
Salesforce on May 5, 2022 and as follows. EOM is the report pulled at the End of Month after
closing the month. We are trying to collect and interpret the data at the dates in multiple of 5 and
understand how the NBB bookings number are flowing from being Open to Closed Won. The
same will be used to check the variance of monthly budget forecast amounts and actual amounts
and then do the reforecasting for the future.

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 DATA ANALYSIS AND INTERPRETAION

The following table shows the actuals for the open sales pipeline of the bookings data. The SaaS
companies create the open funnel in the CRM Software, Salesforce for every stage as we have
discussed before.

Suppose a company forecasts its bookings number for June. 2022 to be 1 million, on the basis of
the information received from the Sales and Marketing team. Now, the sales team would have
created the Opportunities for these

The numbers flowing in the table shows the open funnel numbers for the specific product for a
specific dump date.

For instance, 126,950 reveals that the product family Attendee Hub had the open funnel of
126,950 when pulled a report from Salesforce at 5/5/2022. 117,504 reveals that the product
family Attendee Hub had the open funnel of 117,504 when pulled a report from Salesforce at
5/10/2022, for the Global region, all Roles, all Teams and NBB as the Booking Classification
(BCT). The decreasing figure shows that some of the contracts from the open funnel had closed
between 5/5/2022 and 5/10/2022.

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 DATA ANALYSIS AND INTERPRETAION

The following table shows the actuals for the Closed Won sales pipeline of the bookings data.
The SaaS companies after closing the contracts with the clients mark the open opportunities as
Closed Won in the CRM Software.

Now, the table we discussed before shows the Open Funnel for the specific products as well as
dump dates. The following table shows the Closed Won Funnel.

For instance, 29,678 reveals that the product family Attendee Hub had the Closed Won Funnel of
29,678 when pulled a report from Salesforce at 5/5/2022. 46,411 reveals that the product family
Attendee Hub had the Closed Won Funnel of 46,411 when pulled a report from Salesforce at
5/10/2022, for the Global region, all Roles, all Teams and NBB as the Booking Classification
(BCT). The increasing figure shows that some of the contracts from the open funnel had closed
between 5/5/2022 and 5/10/2022.

Now, also the budgeted column represents the breakup of budgeted forecasted amounts for May,
2022 of 1 million.

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 DATA ANALYSIS AND INTERPRETAION

Now, let's try to understand the interpretation of these percentages in the following table.

For Attendee Hub, the Budgeted figure was 203,259 for May,2022. On Dump Date 5, the Open
funnel was 126,950 and the Closed Won funnel was 29,678. The Total Contract value to be
closed to achieve the budget was 203,259 - 29,678 = 173,581, out of which open funnel on
Dump Date 5 was 126,950.

126,950 / 173,581 = 73%, which means that the funnel is understated. Among the total funnel of
173,581 required to reach our budget numbers the open funnel at Dump date 5 was only 73% of
173,581. Further, we can interpret all the percentages in the following table, anything
below100% means that the funnel for the particular product at that date was understated and
anything above 100% tells that the funnel is overstated.

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 CHAPTER 11 - CONCLUSION

The financial modelling for NBB has been finished after the required testing. Although NBB is
not a major contributor towards the overall monthly revenue; however, it was the major cause
of variance in the older model. Below is the trend of 2021 Actuals compared with the with the
new NBB revenue model forecast:

When we compare the previous year actuals with the revenue forecasted by using both the
methods, we can clearly see that the variance percentage was significantly brought down and
within the targeted range of 2% - 5% (Full year). After analyzing this effectiveness of new
model in reducing the variance with past year actuals, I have applied the same methodology for
current year actuals. I have compared the Jan’22 forecasted (new model) with the revenue
numbers calculated using previous method, i.e., spreading the NBB bookings number in 12
months straight. Below is the analysis for the same.

Also, after accurately forecasting the revenue, by understanding the funnel of the previous
months and analyzing whether the funnel was understated or overstated, the reforecasting can
be done accurately on the basis of the results of the analysis. If, among the total funnel
remaining to reach the budget numbers, the open funnel at different dates of the month in the
multiple of 5, aka, Dump Dates is less than 100%, we say the funnel is understated and if it is
more than 100%, we say the funnel is overstated. Such analysis and data interpretation can be
used effectively to reforecast the future numbers basis, whether the funnel was understated or
overstated in the previous months and by what percentage.

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 CONCLUSION

As my purpose for this project was to reduce the overall revenue variance range to 2% - 5%. I
found that the major contributor in variance reasoning was the revenue forecast for NBB.

The method which we used earlier was not accurate and always had a significate variance when
compared to actual revenue. The method which I proposed included development of a new
model for NBB revenue calculation based on key drivers for NBB revenue, i.e., Term analysis,
Start date analysis and Conversion analysis.

After going through the testing stage, when the results were compared with the older model, it
was discovered that the new model is more efficient in forecasting. Thereby brought down the
variance in the desired range of 2% - 5%.

Also, the variance was reduced for the upcoming months by continuously doing the
reforecasting using the model proposed and the numbers became further more accurate.

In conclusion, I would like to propose these new methods for future revenue forecasting as well
as reforecasting for the SaaS Companies. On the basis of my analysis, I conclude that these two
models if used altogether would generate much more accurate numbers that the older one and
would recommend these model to be used.

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 CHAPTER 12 – CONTRIBUTION AND
LEARNINGS FROM THE PROJECT

Data consolidation and Analysis:

I used data from different sources and databases that needed to be cleaned, organized, and
consolidated. The financial planning and analysis function required an in-depth analysis of large
data. An accurate and effective financial analysis requires quality data from various business
units or departments, and for this reason, data consolidation is relevant for FP&A teams and I
got to learn that.

The revolution of technology has improved the process of data consolidation. I could pull in
data from different sources seamlessly and perform data consolidation and reporting using
business intelligence and artificial intelligence tools.

General and customized FP&A software like Salesforce made data integration and reporting
more accessible and faster, and I could easily access data for modeling, reporting, and variance
analysis.

Business Planning and Forecasting:

While junior to intermediate level FP&A analysts consolidate data and build financial models,
senior FP&A analysts and FP&A managers are in charge of business forecasting and planning.
Managers are responsible for coordinating with other department managers and the FP&A team
to forecast the business finances of the organization. FP&A managers review financial plans,
models, and reports to ensure that financial results and trends are captured accurately. I got an
opportunity to shadow the team while they were working on forecasting and analysis on regular
basis.

The business forecasting function relies heavily on the FP&A team being analytical with utmost
attention to detail. Businesses depend on financial reports and analysis to make critical business
decisions that impact operations, business expenses, capital investments, and employees. When
carrying our business forecasting, FP&A professionals need to provide insights that reflect the
accurate situation of a company to aid effective decision-making.

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Profit and Loss Statement Analysis:

FP&A analysts prepare financial budgets and operating plans for monthly, quarterly and annual
periods. These budgets cover total revenue, expenses, capital costs, and bottom line. A typical
expectation of an FP&A expert is to prepare financial budgets, consolidate data on actual
financial results, and carry out variance analysis to identify why a company either met,
exceeded or fell short of financial targets.

FP&A analysts review the variance analysis for the business and present the final report to
business executives concisely and clearly. When FP&A experts carry out financial analysis, the
corresponding output provides top management with the information needed to lead the
company towards profitability.

The role of an FP&A manager may be streamlined to a ‘profit and loss (P&L) statement finance
manager. In this case, the FP&A manager will be in charge of forecasting, planning, monitoring
an entire P&L, and reporting on the business’s net income to senior executives.

Financial planning and Analysis:

FP&A analysts can be referred to as corporate financial planners. They conduct research to get
business, and economic information that impacts a business’s performance, and they extrapolate
financial outcomes using financial models, scenario analysis, and what-if analysis. I learnt how
to prepare extensive models in excel spreadsheets using nested formulas, pivots, etc.

A financial planning and analysis professional uses historical data from previous periods to
identify trends and patterns. FP&A analysts combine insights from their analysis with current
and future levels of operations to plan and forecast the financial performance of an organization.

Financial modeling:

Financial models produce financial analysis, insights, and reports. I enhanced my skills in
financial modeling as these forms the foundation of their analysis. Most financial planning and
analysis professionals need data visualization tools to present their financial results clearly and
concisely for senior management and business leaders.

FP&A analysts need to have basic to expert skills in data reporting tools and enterprise resource
planning (ERP) software such as SAP, Oracle Hyperion, Oracle Essbase, and spreadsheets such
as Excel or Google sheets to be more effective with financial modeling and reporting.

More recently, FP&A analysts also require data manipulation skills, they are tasked with using
tools such as SQL or Power Query to clean and sort data, which can be used to derive insights

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for decision-making. Financial planning and analysis professionals also utilize data
visualization software such as Power BI or Tableau to present data and insights using graphs,
tables, charts, and other visualizations tools.

Team Management:

Earlier I had the experience of working in a small organization with just my own colleagues
from my institute, but working in an organization with different teams and senior position
employees was a whole new experience. I learnt how to coordinate with other departments and
the communication pattern which is involved at different levels in an organization. It takes
patience and time to finalize the tasks, as you can’t take things casually because of the
involvement of everyone. FP&A Team has in itself three sub teams of revenue, expense, and
booking. Also, bookings team has then again, it’s 3 sub teams and also there are various
stakeholders from which we got ad hoc requests, for which we needed continuous interaction
and communication with them. Being a MNC and headquarters in U.S., I also got to interact
with stakeholders working from U.S.

Report Writing Skills:

I also groomed my report writing skills, summarizing the financial reports so that effective
decisions can be taken. It enhanced my analytical skills, to identify and interpret the tasks or
deviations which are crucial for the entity.

Enhanced Confidence Level:

Meetings with the Senior Position Employees, Managers, Director, Vice President of the FP&A
team on regular basis gave the sense of responsibility and the confidence to express to the
fullest while taking valid facts into consideration.

Communication and Presentation Skills:

Also, I was able to groom my communication skills, presentation skills and writing skills. It
gave rise to better and much effective as well as efficient skills.

Time Management:
As I had to complete various job roles and responsibilities in a limited span of time, I was able
to learn proper time management and ensured that the allotted tasks were completed within
allotted time.

Exposure:

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It was a great opportunity to learn and appreciate the Budgeting, Forecasting, and Variance
analysis in a SaaS Company. I understood how SaaS companies create their business model,
how they earn revenue, how the revenue is earned and bookings made. The exposure array was
widened and not limited to a particular section.

➢ Organizing and maintaining information

➢ Applying knowledge to the task
➢ Working with diverse people
➢ Identifying, understanding and working with professional standards
➢ Exercising leadership
➢ Behaving professionally
➢ Behaving ethically
➢ Listening effectively
➢ Dressing appropriately
➢ Addressing colleagues and superiors appropriately
➢ Allocating time effectively
➢ Adapting effectively to changing conditions
➢ Participating as a member of a team

Summary

The FP&A team is an integral part of any business. The typical day in the life of a financial
planning and analysis analyst is filled with data manipulation, forecasting, modeling, and
analyzing financial results. Newly improved software and tools provide more effective ways for
FP&A analysts to assist businesses in making critical financial decisions for growth and
profitability.

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 BIBLIOGRAPHY

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 THANK
YOU

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