Transparency is an admirable company goal, enthusiastically embraced by Acquia’s leadership. At our quarterly “Company Update” meetings, a significant amount of financial information is shared with the entire company.
But what if you don’t understand the terms in the presentations?
Acquia’s Glossary to the rescue!
Jonathan Pierce, Senior Director, Financial Planning and Analysis at Acquia, has seeded the Glossary with around 50 financial terms that are all extremely relevant.
The Acquia Glossary, you may remember from our first post, is an in-house, updated collection of relevant technology terms that all employees can easily reference via Slack. In that first post, I looked at “digital experience” terms in the Glossary. Post #2 featured the Glossary’s Security terms.
The theme of this post came into sharp focus at a recent Acquia Company Update, when the opening Financial Report by CFO Chris Andersen frequently referred to financial terms that are easily available via the Acquia Glossary.
For example, EBITDA, which stands for “Earnings Before Interest, Tax, Depreciation, Amortization.” This is a company's profits before deducting Interest, Tax, Depreciation, and Amortization expense. “It is calculated by adding back depreciation and amortization expense to operating income.”
A variation, also cited in the Financial Report, is Adjusted EBITDA: “Non-standard profitability metric across companies.” This is an important entry in the Acquia Glossary, because it explains exactly how Acquia calculates its adjusted EBITDA (we add stock-based compensation expense, restructuring expense and expenses related to acquisition and integration to EBITDA).
Another slide in Chris’ update revolved around ARR.
ARR is “annualized value of recurring revenue at a point in time.”
This is a helpful concept to grasp because other benchmarks are based on it, such as Annual Contract Value Bookings (ACV):
“Amount of new ARR added at the end of the first term of a subscription booking; more specifically, exiting annualized value of the contract’s 1st term. It can be bifurcated into New Logo ACV Bookings for new customers and Expansion ACV Bookings for existing customers.”