2026 SaaS Magic Number Report: The Median Is 1.37, Not 0.75

Boards quote 0.75. That is Lars Leckie’s 2008 pour-on-the-gas line, written after Omniture’s CEO walked through how the company decided how much sales and marketing to add. The typical private B2B SaaS company is now at 1.37. Public tables often use a GAAP-revenue version of the same formula because they cannot see net new ARR. Operators mix the bar, the median, and the public proxy, then treat a blended number as a spend decision.

The SaaS Magic Number asks one question: for every dollar of last-quarter sales and marketing, how much annualized new recurring revenue showed up this quarter. It is not the Rule of 40. It is not CAC payback. It is the efficiency half of the growth plan. This B2Bcentr report separates the samples, shows which formula each one uses, and turns the ratio back into a number a founder can put next to the marketing and selling lines.

Key Takeaways

• The median private B2B SaaS Magic Number is 1.37 on full-year 2025 actuals, up from 0.94 in 2024 — the first time the four-year Aleph × Benchmarkit series has cleared 1.0. Figures come from the 132 of 342 companies that reported the metric in the 1 June 2026 report.
• Leckie’s original bar is still 0.75: below it, stop adding gas; above it, invest. Above 1.5, he wanted the phone call. The 2025 bottom quartile sits at 0.68, still under that floor. The 75th percentile is 2.14, up from 1.27 in 2022.
• Companies growing more than 50% posted a 2.40 median Magic Number. The 11–30% growth band sits below 0.75. Fast growth and efficient GTM coexisted in 2025. Mid-growth spend without return did not.
• CAC payback in the same Aleph sample is a 16-month median (198 companies), down from 18 months, with a top quartile of 6 months or fewer and a bottom quartile of 24 months or more. Blended CAC ratio: $1.30 of S&M per $1 of new ARR. New-name CAC ratio: $1.63.
• Private B2B SaaS still spends a median 8% of ARR on marketing and 15% on selling, per SaaS Capital’s March 2026 survey of more than 1,000 companies. Those are the dollars the Magic Number is dividing. They are not one bucket.
• KeyBanc and Sapphire put account-executive payback on a different clock: expected to shorten to 18 months by 2026. That is a seat metric, not a company Magic Number.

Three samples, three different Magic Numbers

Search “what is a good SaaS Magic Number” and you will get 0.75. The useful question is which sample produced the number sitting next to it.

Lars Leckie, 4 March 2008. Guest post on Will Price’s blog, after Josh James of Omniture described the metric the company used to decide how much go-to-market spend to add. Formula: (this quarter’s recurring revenue − last quarter’s) × 4, divided by last quarter’s total sales and marketing expense. Worked example on the page: recurring revenue of $1 million, then $1.2 million, against $800,000 of S&M → Magic Number 1.0. Next quarter $1.5 million against $900,000 → 1.33. The operating rule: below 0.75, step back and look at the business; above 0.75, pour on the gas; above 1.5, call him. This is the bar, not a 2026 median.

Aleph × Benchmarkit, 1 June 2026. 342 B2B SaaS and AI-native software companies; Magic Number from the 132 that reported it. Full-year 2025 actuals. Median 1.37, up from 0.94. Bottom quartile 0.68. 75th percentile 2.14. This is the private-operator number for 2026 planning. Aleph’s own page is explicit: the report is a 2026 edition of 2025 actuals.

Scale Venture Partners / Wall Street Prep, public proxy. Scale VP’s version exists because public companies do not have to disclose net new ARR. The workaround replaces net new ARR with the difference between the two most recent quarterly GAAP revenue figures, annualized, over prior-quarter S&M. Wall Street Prep’s bands: below 0.75 inefficient; 0.75 to 1 moderately efficient; above 1.0 very efficient. A Magic Number of 1.0, on that definition, means the company can pay back that quarter’s S&M with the incremental revenue generated across the next four quarters. Same skeleton as Leckie. Different numerator if you are not a pure recurring-revenue reporter.

SaaS Capital’s 2026 spending survey — the same 1,000-plus-company sample behind B2Bcentr’s marketing budget and churn reports — does not publish a Magic Number. It publishes the denominator. Marketing 8% of ARR. Selling 15%. Adding those medians is not a surveyed S&M ratio, and turning that sum into a Magic Number is not a surveyed score. If your board is using 0.75 and your finance team is using 1.37, you are not disagreeing about health. You are disagreeing about the sample.

Growth plus which formula

Leckie’s formula is simple:

Magic Number = (QRev[X] − QRev[X−1]) × 4 / ExpSM[X−1]

Two conventions change the answer more than the decimal.

Lag the S&M. Last quarter’s spend produced this quarter’s new ARR. Dividing this quarter’s new ARR by this quarter’s spend flatters a team that is ramping cost and punishes one that just cut. Aleph calls that the most common error.

Lock ARR or GAAP revenue. Private operators can use net new ARR (new logos + expansion − churn − contraction). Public comps often cannot, so they annualize the GAAP revenue delta. Mixing them is how a board and a finance team argue past each other. Leckie also warned that the number is penalized by wasted spend, bad sales execution, and churn. A high Magic Number with a leaky base is expansion covering a hole, not an efficient engine.

A Magic Number of 1.37 means $1.37 of annualized new ARR per $1 of lagged S&M at the median company that reported it. It does not mean CAC payback is 12 ÷ 1.37 months. Aleph treats the two as roughly inverse and tells operators to read them together. This report does not invent a conversion.

The jump from 0.94 to 1.37 was a cut, not a rebound

Aleph’s 0.94-to-1.37 move looks like a GTM that started working. Decompose it and it is a smaller company.

Median growth in that sample fell to 20%, down from 26% the prior year and from 30% in 2022. R&D fell from 35% of revenue to 27%. Sales and marketing came down too. Gross revenue retention dropped from 88% to 84%. Seat-based companies slipped below 100% NRR, to 98%; usage-based companies posted 108%. ARR per employee climbed 29% to $193,000. The Magic Number improved because companies spent less on the lines that produce next year’s growth, and because 2025 was GTM rationalization — tighter targeting, not more spend.

That is the same P&L in the 2026 marketing-budget report. SaaS Capital still has marketing at 8% of ARR and selling at 15%. Cutting marketing to “protect Magic Number” while sales headcount stays put does not raise the score for long — and a fully loaded US SDR seat is already about $121,000 before CRM, data, and sequencer licenses.

KeyBanc Capital Markets and Sapphire Ventures, in the 16th annual private SaaS survey released 13 November 2025, put the other side of the same turn: ARR growth expected to accelerate from 15% in 2024 to 20% in 2025, and account-executive payback expected to shorten to 18 months by 2026. Use KeyBanc for that AE-seat clock. Use Aleph for a 2025 private Magic Number and company-level CAC payback. They are not peers.

Growth band is the filter, not the formula

The cohort table inside Aleph is the operator warning.

High growth and a high Magic Number showed up together. The 11–30% band did not. If your Magic Number is under 0.75, adding another SDR pod is a score cut, not a plan.

CAC payback in the same report rhymes with that split. Companies growing more than 50% recover CAC in 10 months. The 21–30% growth band sits at 22 months, the highest in the sample. The 11–20% band is at 18 months.

Aleph does not print Magic Number by ACV on the pages fetched for this report, so none is invented here. It does print payback by ACV: 11 months below $5,000, 22 months at $50,000–$100,000. Horizontal B2B SaaS recovers CAC in 14 months versus 18 for vertical. If you sell enterprise, the all-in 16-month median will make you look worse than your ACV band.

The dollars the ratio is dividing

A Magic Number without a P&L line is a slogan. SaaS Capital’s 2026 department medians are the private-B2B denominator: selling 15% of ARR (up from 13%), marketing 8% (unchanged). At the $3 million to $5 million ARR band, selling is 12% and marketing is still 8%. Convert that to dollars at $5 million ARR. These are arithmetic from published percentages, not a surveyed combined S&M median.

A $1 million acquisition budget is not “the Magic Number.” It is the spend the ratio will judge next quarter. At Aleph’s 1.37 median, each $100,000 of lagged S&M is associated with $137,000 of annualized new ARR — arithmetic from the published ratio, not a surveyed dollar figure, and only if your company is in that 132-company cut.

Marketing is not the growth line. Selling is. If you cut the 8% to lift Magic Number while the 15% stays put, you have starved the top of a funnel that sales still has to fill. Leckie built the metric to decide whether to add quota-bearing reps, not to congratulate a hiring freeze.

Equity-backed companies in the SaaS Capital sample spend 100% more on marketing and 70% more on sales than bootstrapped peers. They are buying different growth rates (median 25% versus 20%) with different cash. Copying an equity-backed Magic Number onto a bootstrap P&L, or the reverse, is how 0.75 and 1.37 end up on the same slide.

How to set your number without copying 0.75

1. Pick the sample that matches you. Private B2B: Aleph’s 1.37 median, 0.68 bottom quartile, 2.14 top quartile, on 2025 actuals. Original rule: Leckie’s 0.75 / 1.5. Public comps: Scale VP / Wall Street Prep GAAP formula and the 0.75 / 1.0 bands.
2. Lock the formula and lag S&M. Recurring revenue (or net new ARR) if you can see it. GAAP revenue delta × 4 if you cannot. Write the definition at the top of the slide. Publish the two inputs, not just the ratio: new ARR this period, S&M last period.
3. Pair it with payback, GRR, and the spend mix. Aleph’s rule: when Magic Number, CAC payback, NRR, and GRR are all top-quartile, accelerating GTM investment lifts growth and the Rule of 40. When they are not, more spend mostly erodes both. If GRR is the hole, fix retention before you add another growth dollar. If selling is already 15% of ARR and marketing is residual, you have a mix problem, not a “Magic Number is low” problem. AI GTM workflows stretch the same S&M dollars; they are not a reason to pretend the 8% and 15% can go away.
4. Do not convert Magic Number into months and call it payback. Use both. Circle 16 months as the 2025 private CAC-payback median, 6 months as top quartile, 22 months as the $50,000–$100,000 ACV band, and 18 months as KeyBanc’s 2026E AE-payback direction.

A one-page math check before the board meeting:

1. QRev this quarter and last, on the same definition (ARR or GAAP).
2. S&M last quarter — marketing and selling in the same bucket for this ratio, then split back to 8% / 15% for the plan.
3. Magic Number = (delta × 4) / lagged S&M.
4. Circle 0.75 as the original bar, 1.37 as the 2025 private median, 2.14 as the private top quartile, 0.68 as the private bottom.
5. CAC payback on Aleph’s formula, next to it, not instead of it.

If those five numbers do not fit on one slide, the 0.75 was never your number. Change the sample, the formula, or the stage assumption. Do not change Leckie.

FAQ

What is a good SaaS Magic Number in 2026?

Leckie’s original bar is still 0.75 for “keep investing” and 1.5 for “this is working unusually well.” Wall Street Prep treats above 1.0 as very efficient. The private median in Aleph’s 2025 actuals is 1.37 (top quartile 2.14). “Typical” in that sample is now above 1.0 for the first time in four years. The bottom quartile (0.68) is still below the 2008 floor.

How do you calculate the SaaS Magic Number?

Subtract last quarter’s recurring revenue from this quarter’s, multiply by four, and divide by last quarter’s sales and marketing expense. That is Leckie’s 2008 formula, and it is the Scale VP public proxy when you substitute GAAP revenue for recurring revenue. Private operators who can see net new ARR (new + expansion − churn) should use that as the numerator and still lag S&M. Do not divide this quarter’s new ARR by this quarter’s spend.

What does a Magic Number below 0.75 mean?

Your lagged S&M is not generating enough annualized new ARR to justify more of it. Leckie: step back and look at the business. Aleph: the 2025 bottom quartile is at 0.68, and the 11–30% growth band sits below 0.75 — audit targeting, conversion, and sales productivity before adding budget, because more spend compounds an inefficient motion.

How is the Magic Number different from CAC payback?

Magic Number is new ARR per dollar of lagged S&M. CAC payback is months of gross profit to recover the cost of acquiring a customer. Aleph’s 2025 medians are 1.37 and 16 months. KeyBanc’s 2026E figure of 18 months is account-executive payback, a third clock. A high Magic Number usually goes with a short payback. They are not interchangeable, and this report does not convert one into the other.

Should you increase sales and marketing spend if the Magic Number is above 1.0?

Generally yes if payback, NRR, and GRR are also strong — Aleph’s top-quartile rule, and what Leckie meant by pouring on the gas above 0.75. A 1.37 with 84% GRR (Aleph’s 2025 median) is not the same company as a 1.37 with a tight base. If selling is already 15% of ARR and marketing is below 8%, hiring another AE will not fix the mix.

Methodology

Figures are taken from primary publications, not from secondary “Magic Number 2026” roundups.

• Aleph × Benchmarkit, SaaS Magic Number benchmark (2026), CAC payback period benchmarks (2026), and 2026 SaaS Benchmarks: 5 takeaways. Published 1 June 2026. 342 B2B SaaS and AI-native companies; Magic Number from 132 respondents; CAC payback from 198. CY-2025 actuals.
• Lars Leckie, “Magic Number for SaaS Companies,” 4 March 2008, guest post on Will Price’s blog. Original formula, 1.0 / 1.33 worked example, 0.75 and 1.5 decision rules.
• Wall Street Prep, SaaS Magic Number. Scale VP public-company workaround (GAAP revenue delta × 4) and the 0.75 / 1.0 bands.
• SaaS Capital, 2026 Spending Benchmarks for Private B2B SaaS Companies, 10 June 2026. 15th annual survey, completed March 2026, more than 1,000 private B2B SaaS companies. Marketing 8%, selling 15%, the $3 million–$5 million band, and the equity-backed vs bootstrapped spend gaps. No 2026 SaaS Capital Magic Number is published on the page fetched, so none is invented here.
• KeyBanc Capital Markets and Sapphire Ventures, 16th annual Private Company SaaS Survey, 13 November 2025 (press release; Sapphire summary). ARR growth 15%→20%; EBITDA expected to breach profitability in 2026; AE payback expected to shorten to 18 months by 2026.

Dollar examples at $5 million ARR and the $137,000-per-$100,000 illustration are arithmetic from published percentages and the 1.37 median, not surveyed dollar figures. Recheck Aleph, SaaS Capital, and KeyBanc before you lock a 2027 GTM plan.