Magic Number

Magic Number: Sales efficiency metric measuring revenue generated per dollar of sales and marketing spend.

Formula

Magic Number = (QoQ ARR growth) / (Prior quarter S&M spend)

Computable definition

The canonical formula in the GASP formula grammar. The MCP server compiles it to SQL over the datasets listed below.

(metric.arr - lag(metric.arr, 1 quarter)) / lag(window(sum(field.cost where field.cost_function = 'gtm'), 1 quarter), 1 quarter)

Unit: ratio

Notes: ARR growth over the quarter ending at period_end, divided by sales and marketing spend in the quarter before that. The window makes the denominator one quarter of spend whatever the reporting period.

Data requirements

Grain: Monthly aggregate · Frequency: Monthly · Aggregation: aggregate (month) · Staged: yes, a cohort or prior-period comparison that a staged dataset makes cheaper · Main source: Finance / ERP.

Field	Dataset	Type
`cost`	cost_event	decimal
`cost_function`	cost_event	string
`event_date`	cost_event	date
`mrr`	subscription	decimal
`snapshot_date`	subscription	date
`subscription_status`	subscription	string

Example SQL (Postgres)

SELECT (CAST((((((SELECT COALESCE(SUM(mrr), 0) FROM subscription WHERE snapshot_date = :period_end AND subscription_status = 'active')) * 12)) - ((((SELECT COALESCE(SUM(mrr), 0) FROM subscription WHERE snapshot_date = (:period_end - INTERVAL '3 month') AND subscription_status = 'active')) * 12))) AS DOUBLE PRECISION) / NULLIF((SELECT COALESCE(SUM(cost), 0) FROM cost_event WHERE event_date > ((:period_end - INTERVAL '3 month') - INTERVAL '3 month') AND event_date <= (:period_end - INTERVAL '3 month') AND cost_function = 'gtm'), 0)) AS magic_number

Access: recommended sensitivity tier restricted, access scope unscoped. Guidance your policy engine enforces.

From an agent: with the GASP MCP server, call lookup_metric({ "name": "Magic Number" }) or generate_query({ "metric": "Magic Number", "adapter": "<your adapter JSON>" }).

Benchmarks

Below 0.5: Inefficient, fix before scaling
0.5-0.75: Acceptable
0.75-1.0: Efficient (2024 median: 0.90)
Above 1.0: Very efficient, invest more aggressively

What It Tells You

Whether sales and marketing investment is generating sufficient returns.

Connected in the GASP relationship graph.

Upstream: what drives this

ARR component of Magic Number (Core)

Downstream: what this drives

Magic Number measures Subscription (Entity)

View canonical definition →

Sources

← Back to Finance metrics