Series B finance: growth quality, retention and CAC payback
A fictional finance-software company is scaling after Series B. The board wants to know whether new-customer growth, expansion and acquisition spending are creating a durable growth engine.
Numeric’s Series B is a verified funding announcement. All ARR, acquisition spending, retention and burn figures below describe a fictional teaching company, not Numeric. They are not industry benchmarks.
Independent Finance Circle learning material. The source organisation does not sponsor, author or endorse this exercise.
Clarify. Structure. Calculate. Defend.
Take 2 minutes to clarify the decision and definitions, 3 minutes to structure the analysis, then work the exhibits. Finish with a concise recommendation and answer a follow-up. The time is a suggested practice format, not an employer requirement.
Clarify before solving
What are the data basis and reporting boundary?
Numeric’s Series B is a verified funding announcement. All ARR, acquisition spending, retention and burn figures below describe a fictional teaching company, not Numeric. They are not industry benchmarks.
Which assumptions can I use without requesting more data?
USD millions. Opening ARR 8; expansion ARR 2; contraction and churn ARR 0.8; new-logo ARR 3. No acquired ARR or FX. All-in acquisition spending allocated to the new-logo cohort is 3. Gross margin is 80%. Assume cohort ARR earns evenly across a year for the payback approximation.
What decision am I expected to support?
At new-logo ARR of 2, calculate ending ARR, CAC payback and revised burn multiple, holding cash burn at 2.
Build your structure
- Opening-cohort ARR bridge and NRR
- New-logo gross profit and acquisition spending
- CAC payback and burn multiple definitions
- Acquisition productivity, timing and retention
Use the branches that matter to this decision. A memorised framework is less useful than explaining why each analysis could change your recommendation.
Everything you need to work the case.
Assumptions & boundaries
- USD millions. Opening ARR 8; expansion ARR 2; contraction and churn ARR 0.8; new-logo ARR 3. No acquired ARR or FX.
- All-in acquisition spending allocated to the new-logo cohort is 3. Gross margin is 80%. Assume cohort ARR earns evenly across a year for the payback approximation.
- Annual net cash burn is 2. Burn multiple = net burn / net new ARR. Director downside reduces new-logo ARR to 2 without changing acquisition spending or other inputs.
Illustrative ARR and cash inputs
| Driver | USD million / percent |
|---|---|
| Opening ARR | 8.0 |
| Expansion ARR | 2.0 |
| Contraction and churn ARR | 0.8 |
| New-logo ARR | 3.0 |
| Acquisition spending | 3.0 |
| Gross margin | 80% |
| Annual net cash burn | 2.0 |
Choose the responsibility. Solve the decision.
Each level uses the exhibits above and asks a different question. Your entries stay in this open page only; copy your work before leaving.
Reconcile ARR and retention.
Calculate ending ARR, net new ARR and NRR.
Why exclude new customers from NRR?
Numerical checks compare your arithmetic with the case model. Written recommendations are self-practice and are not automatically graded.
03 · Reveal worked solution & decision guide
Expected numerical answers
- Ending ARR
- 12.2 USD million
- Net new ARR
- 4.2 USD million
- NRR
- 115 %
Work through the calculation
- Ending ARR = 8 + 2 − 0.8 + 3 = 12.2. Net new ARR = 12.2 − 8 = 4.2.
- NRR = (8 + 2 − 0.8) / 8 × 100 = 115%; exclude new-logo ARR from this ratio.
A strong concise response
My calculation shows that ending arr is 12.2 USD million; net new arr is 4.2 USD million; nrr is 115 %. ARR is a defined recurring run rate, not recognised revenue or cash collected. State the company’s actual metric definition.
Answer the interviewer follow-up
Why exclude new customers from NRR?
NRR measures recurring revenue change from the opening customer cohort. Including new logos would overstate retention and expansion of that cohort.
Assessment rubric · 20 points
For self-review or mentor discussion. This rubric is not an automated written-answer grade or an employer scoring system.
Correctly derives all 3 numerical results for this level, keeps signs and units consistent, and explains the method.
Explains the objective: Reconcile ARR and retention. States the supplied scope, timing and metric definitions before calculating.
ARR is a defined recurring run rate, not recognised revenue or cash collected. State the company’s actual metric definition. Addresses the interviewer follow-up without contradicting the facts.
Leads with a clear conclusion, distinguishes facts from assumptions, and identifies the next evidence needed. Does not claim the source company asked or endorsed this question.
Use full precision until the final rounding. Alternative written recommendations may be reasonable if they respect the facts and explain assumptions. This is Finance Circle’s guide, not an official source-company answer.
Source & attribution
The references below identify the public reporting, hiring guidance, research or mock-interview material used for context. Finance Circle wrote the exercise and its answers. Illustrative figures are explicitly identified; they are not company results or findings.
The funding milestone is public; operating figures and scenario conclusions are not claims about Numeric.
Source reviewed 30 October 2026. No external page is needed to answer this exercise. Company names and logos identify sources only. All trademarks belong to their respective owners.