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Revenue Quality
Customer Churn & Cohort Retention Teardown
Topline revenue growth frequently masks catastrophic underlying churn decay. Analyzing monthly logo churn vs. net revenue retention (NRR) reveals whether the customer base is sustainable post-close.
🚩 Common Seller Red Flags & Tricks
- Monthly logo churn exceeding 5% in B2B SaaS (annualized customer turnover > 45%).
- Heavy reliance on annual prepay promotions that artificially pulled forward future cash flow into the trailing 12 months.
- Top 3 accounts contributing over 35% of total monthly recurring revenue (customer concentration cliff).
- Net revenue retention (NRR) below 90% without substantial new top-of-funnel customer acquisition.
🛡️ Buyer Forensic Audit Steps
- Request cohort retention heatmaps broken down by acquisition month over 24 months.
- Isolate voluntary cancellations from involuntary failed credit card payment churn.
- Audit customer support ticket volume for complaint clusters regarding bugs or billing disputes.
- Interview top 5 customers under an NDA broker escrow protocol prior to closing.
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