SaaS profit and loss
Gross margin, sales and marketing, R&D, G&A, cash.
By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.
On this subject: saas profit and loss.Updated 30 September 2026
What it does
The income statement of a subscription business, with its two distinctive lines built rather than assumed: cost of revenue as hosting, support and success against revenue, and sales and marketing as the sales team from the capacity sheet plus the marketing spent to feed it. Research and development and general and administrative scale with revenue. Below the operating line, the change in deferred revenue turns profit into the cash the model implies, and the rule of 40 is read.
Where it lives
The same schedule in each model that carries it, with the rows to open. Open a model in the browser, go to the sheet, and click the lines.
- P&L, rows 6–16: Revenue, Cost of revenue, Gross profit, Gross margin…
- P&L, rows 19–21: Change in deferred revenue, Operating cash flow before tax and capex: profit plus the deferred revenue build, Rule of 40: year-on-year ARR growth plus operating margin
What a reviewer looks for
- Sales and marketing as a flat percentage with no team behind it.
- Gross margin that ignores customer success and hosting.
- Profit read as cash, or cash read as profit.
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