Report on revenue, recurring revenue, and churn

Kite settles your definitions first, because the definitions decide whether two months of reports can be compared at all. It proposes a rule for each choice that changes the answer, explains why, and asks you to confirm or adjust it.

For a typical software company on Stripe, Kite might propose these rules:

• Monthly recurring revenue is the monthly value of every active subscription at the end of the month. Annual plans count at one-twelfth of their price, and discounts that apply every month are subtracted.
• Trials are left out until the first successful payment.
• A churned customer is one whose last active subscription was cancelled during the month. A customer who switches plans hasn't churned.
• Revenue is what customers actually paid during the month, after refunds.
• Currencies are reported separately, so euros and dollars are never added together.

Once you agree, Kite saves the rules in your team's knowledge base. If you later decide that a customer who cancels and returns within two weeks shouldn't count as churned, you tell Kite once, and it records the change with the date it took effect.

The same approach settles disagreements between tools. If your Stripe dashboard, your spreadsheet, and your accounting software show three different MRR figures, Kite works out why they differ, and you choose which one is the official number. Kite records that choice so the question doesn't come back next quarter.

You calculate MRR from Stripe by adding up the monthly value of every active subscription, and you calculate churn by counting the customers whose subscriptions were cancelled during the month. Kite does both by reading your Stripe records directly.

Kite reads each subscription's status, plan, price, billing period, trial dates, and cancellation date. Status tells it which subscriptions are active, trialing, past due, or cancelled. Price and billing period tell it how much each one is worth per month. It also reads charges, refunds, and invoices to total the revenue you actually collected, and it counts each payment only once.

Then Kite breaks the month's change in MRR into its parts. Here's what that looks like for a company that started September with 210 paying customers and $18,400 in MRR:

• New MRR. 24 new customers added $2,100.
• Expansion. 9 customers upgraded, adding $640.
• Contraction. 4 customers downgraded, removing $180.
• Churned MRR. 11 customers cancelled, removing $930.

That leaves you with $20,030 in MRR at the end of September. Customer churn was 11 out of 210, or 5.2%. Revenue churn tells a different story. Upgrades from existing customers made up for more than half of what cancellations and downgrades removed, so net revenue churn was 2.6%. Kite reports both kinds of churn, because a business can lose customers and still grow revenue from the ones who stay.

Kite also lists the 11 customers who cancelled, along with their plans, how long they'd been paying, and whether a failed payment came before the cancellation. A cancellation after a failed card payment usually needs a billing reminder rather than a marketing campaign.

You get a simple revenue report from Shopify by totaling the month's orders and subtracting discounts and refunds. Kite reads your Shopify orders for the period, along with their line items, totals, and status, and builds the report from those records.

A store report from Kite covers the numbers an owner checks first. Say your store had 1,340 orders in September with $61,200 in gross sales. Kite subtracts $4,100 in discounts and $2,300 in refunds to show $54,800 in net sales. It also shows the average order value, your best-selling products, and how September compares with August.

Most stores don't have recurring revenue in the subscription sense, so Kite measures churn the way a store experiences it: customers who stop coming back. It looks at how often your customers usually reorder and then counts the people who have gone well past that gap. If most of your coffee buyers reorder every five weeks, a customer who hasn't ordered in twelve weeks has probably lapsed. Kite can show you how many lapsed customers there are, what they used to spend, and which products they bought.

If you sell subscriptions through a Shopify subscription app, those renewals arrive in Shopify as orders. Kite can count them as repeat orders, and the subscription app's own reports remain the most precise record of active subscriptions.

Kite explains why the numbers changed, because a report that only says MRR rose 9% leaves you guessing about what to do next. Each report puts the change into plain sentences and points to the records behind it.

Kite looks for the patterns that explain most of the movement. Maybe cancellations clustered on one plan, or new customers this month chose the annual plan more often than usual. A single large customer upgrading might account for most of the month's expansion. On the store side, a discount code might have doubled orders while lowering the average order value.

When you connect the tool that records where your customers came from, such as Google Analytics, PostHog, or your CRM, Kite can also match customers to the campaigns that brought them in. That shows whether the customers from your webinar stayed longer than the ones from a paid campaign. The match depends on both systems recording the same email address or customer ID, so Kite tells you how many customers it could match.

Kite can put the report on a schedule, so it arrives on the first business day of every month without anyone asking. Each run reads the latest records, applies the definitions you agreed on, and compares the results with the months before.

You choose where the report goes. In the Kite web app, it arrives as its own conversation with interactive charts and tables. If your team uses Slack, it can post to the channel you name. If not, Kite emails it to the person who set it up, and replying to that email continues the conversation. Kite can also publish the report as a page with a stable link that you can share with an investor or a cofounder.

Kite keeps a dated record of each month's figures in your knowledge base. Six months in, you can ask for your churn by month for the year, and Kite answers from the same definitions every time.

Kite reads revenue and churn to decide what marketing work is worth doing, not only to report it. When the report shows a problem, Kite proposes a response.

If cancellations rose among customers in their first month, Kite might propose a better welcome email sequence and a clearer onboarding page. A group of lapsed store customers who used to buy one product is the audience for a win-back email with a code for that product. When the report shows that one channel brings in customers who stay, Kite suggests putting more of the next campaign behind it.

Kite writes the emails, pages, and campaign copy, and asks for your approval before it publishes or sends anything. After the work ships, the next month's report shows whether churn among those customers came down.