Finance & accounting
The finance & accounting team is responsible for helping Sourcegraph acquire and allocate resources optimally, plan for the future, track progress and execution, and measure results.
Team
Members
-
Tommy O Donnell, Manager, Financial Planning & Analysis
- Kendrick Morris, Finance and Operations Analyst
-
Desene Sterling, Financial Controller
- Keely Aguayo, Payroll Manager
- Amy Johnson, Accountant
- Samantha (sam) Ulrich, Senior Accountant
- Nicole Comber, Deal Desk Manager
Roles
See our careers page for open roles on the Finance team.
Contact
Outreach and questions for the finance team can be asked in the #finance Slack channel, by reaching out to the finance@sourcegraph.com email, or to the finance team members listed above directly.
Objectives
- Provide timely and accurate financial information
- Present information in a format that allows for sound decision making
- Ensure that our Boards expectations are aligned with all teams operational objectives
- Liaise with all other teams to become trusted business partners
- Safeguard the assets of the Company
Goals
FY’23
- Introduce financial reporting tools / software that will support long term value to our financial reporting process
- Continuously monitor and evaluate our financial reporting metrics to understand key trends, and determine if new metrics need to be introduced as the company grows
- Become a trusted business partner to all non Finance team members at Sourcegraph
- Ensure that we build strong relationships with our customers and add efficiencies to our billings and collection process
- Support other operational objectives within the Company
Reporting
Fiscal years
A fiscal year is a one-year period that corporations like Sourcegraph use for accounting and budgeting. Sourcegraph’s fiscal year runs from February 1 to January 31. Having our fiscal year offset by one month from the calendar year ensures that our fiscal doesn’t end during December holidays, making our quarters more even and predictable, and eliminating pre-New Year stress for our sales, finance, and other teammates.
Fiscal years that don’t align with calendar years (such as our fiscal year) are referred to by the year in which the period ends.
Fiscal year 2023
- : 01 February, 2022–30 April, 2022
- : 01 May, 2022–31 July, 2022
- : 01 August, 2022–31 October, 2022
- : 01 November, 2022–31 January, 2023
Sources of truth
Definitions
ARR
Topline Metrics Definitions ARR Definitions
Annual Recurring Revenue (ARR) is the dollar value of contracted recurring revenue in a (normalized) one-year period.
ARR includes committed bookings with contract start dates that fall in the first 15 days of the following calendar month. This allows Sourcegraph sales team members to get credit for renewals and expansions that may fall in the (near) future. Exceptions to this require written approval from the VP of Operations and the VP of Sales. Please see ARR timing examples.
Furthermore, if the Company enters into a multi-year contract with a customer and the out-year billings are contractually locked in, then we will recognize ARR on a straight-line basis. If there is a term or clause in the contract that provides for an opt-out arrangement, then we will only recognize the portion of ARR that is contractually guaranteed. This policy allows Sourcegraph sales team members to get credit for deals with higher pricing in the later portion of the contractual period. Exceptions to this require written approval from the VP of Operations and the VP of Sales. Please see ARR examples.
IARR
Incremental ARR (IARR) is the change in ARR from one period to another.
New IARR
New IARR is IARR from new customers (i.e., organizations that were not existing customers at the beginning of the period). See also expansion IARR.
Expansion IARR
Expansion IARR is IARR from existing customers (i.e., organizations that were already customers at the beginning of the period).
If within a single period a new customer signs a contract which then grows in ARR before the end of the period, the total ending ARR is all considered new IARR, not expansion IARR. For example, if Acme Corp signs a $100k contract on February 3 and then the contract expands to $200k on March 5, all $200k would be considered new IARR for .
The finance team reviews the AR aging schedule on a monthly basis and assesses customer collectability risk. If an existing customer signs a contract but holds an outstanding bill which the Finance team has deemed a high probability to be uncollectible, the Company will not recognize Expansion IARR until the full amount of the outstanding invoice is paid.
Churned/contraction IARR
Churned/contraction IARR is from customers who do not renew their contract (churn) or whose contract decreases in ARR (contraction). This results in a decrease in ARR for the business.
Booking
A booking is when a customer commits to pay us money. This includes when:
- A new customer just started paying self-service or signed a contract
- An existing customer (depending on their contract) takes an action that increases the amount of revenue we will earn from them (such as growing usage or using more premium features)
- An existing customer renews (including when the renewal is for the same ARR as the previous period)
Net dollar retention
Net dollar retention (NDR) is measures how much revenue a cohort is generating (expansion - churn) in a given period relative to its original size (dollar amount).
Calculation: (Beginning period ARR + existing customer expansion - churn/contraction) / beginning period ARR
For example, if a quarterly cohort is $100k of new business and the following quarter their expansion (net of churn) is $25k, their quarterly NDR will be ($100k + $25k)/$100k = 125%.
Budget
The plan was communicated, and approved, by the Board, at January 22, 2022. You can see the details of the plan Here. At the time of completing this plan, the expected company headcount as of year end was 252. The plan approved for an addition of 130 heads in meaning that we will exit with 382. The plan also captures significant growth for year on year investment in our marketing program spend, software spend, and professional services spend. The plan was built following detailed consultation and input from our Leadership team. We focused on the key questions:
- Where do we need to invest dollars in order to deliver incremental ARR?
- Where do we need to invest dollars in order to stay ahead of our competition?
- What other investments do we need to make in order to ensure that the business can operate efficiently and effectively, whilst maintaining ambitious growth targets?
When reviewing and finalizing our plan, we met with our investors and leveraged benchmark guidance that they were able to provide on companies who are experiencing similar growth, opportunities and challenges. We used these benchmarks to gauge our growth and spend versus this peer group.
How the plan was built
The plan was built at a departmental level. We have 9 departments:
| Department | Department (Budget owner) |
|---|---|
| R&D Engineering | Nick Snyder |
| R&D Product | Christina Forney |
| Marketing | |
| Sales | Gregg Stone |
| Customer Support | |
| Customer Engineering | Aimee Menne |
| Operations | Dan Adler |
| Talent & People-ops | Carly Jones |
| Exec | Connor O’ Brien |
Within each department, there are also cost centers. The cost center structure can be viewed within Bamboo. The plan was built by allocating and reviewing costs at the cost center level. This structure allowed us to be more detailed and analytical in our investment plan.
How we will monitor performance versus plan
Following each month end at , the finance team will share a reporting pack with the head of each department that will outline the following:
- Cost (on a $ basis) versus plan for that month and for that quarter to date
- Updated forecast for the remainder of fiscal quarter, and year, versus plan
- Headcount versus plan
- Company level metrics
- ARR vs plan
- Burn vs plan
The above information will be shared via Google slides on business Day +8 following the monthly financial close. As part of this review process, Finance and Department leads will also evaluate our investments for the remainder of the fiscal year and determine if any adjustments are required. There are a number of scenarios that could require us to make an adjustment that would deviate from the plan. Some of these might include:
- A marketing program has generated a significant amount of opportunities beyond expectation.
- We want to allocate more dollars to this program.
- Our Engineering and Product team believe that there is an opportunity to invest in a feature that will have a meaningful impact on our ARR growth.
- We see inbound activity beyond what was planned and we need to adjust the hiring plan for the sales team.
- Our pace of growth is negatively impacted by adverse macroeconomic conditions. We determine that spending refinements are required in order to manage and maintain our forecasted cash position.
The monthly review that will take place between Finance and Department leads should identify the gaps and opportunities that exist. Any adjustments will be documented and provided to the VP of Operations who will provide final sign-off.
Adjustments to investment plan outside of monthly review cycle
Our goal is to ensure financial discipline, however, as a Finance team, we also do not want to constrain growth, or be slow to react when we determine that a team is lacking resources and is under prolonged pressure. We understand that there will be certain occasions where department leads may wish to make an adjustment to their budget. When a department lead determines that it is necessary to complete an off cycle adjustment to the budget, please provide the following detail:
- If headcount related, please provide the following information:
- complete the headcount change request form
- If non- headcount related, please provide the following information:
- What is the product, service that we are looking to purchase?
- What is the purpose of this product or service?
- Who from Sourcegraph will manage the vendor relationship?
- What is the business need for the adjustment to the budget?
- What is the opportunity loss if we do not proceed with this adjustment?
For non Headcount related requests, the above detail should be provided to the finance team via the slack #vendor-request channel. The finance team will commit to respond within 24 hours.
Process
See our process docs.
Accounting
Our internal Accounting team closes the books monthly and produces our financial statements. We also process payables, prepare taxes, file corporate registrations, and more.
Reach out to the Finance team for an introduction if needed.
Accounts Payable
Travel & Expenses
Accounts Receivable
Fixed Assets
Deal Desk
Deal Desk supports Sales on non-standard deal structures, offering collaborative support and guidance on contract components. We coordinate internal approvals of paperwork with other internal stakeholders in order to deliver compliant documents and we support throughout the deal closing process.
- All requests should be submitted to the #deal-desk slack channel.
- SLA: 1 business day.
- Additional information: Deal Desk Site
- For questions, please email us at: dealdesk@sourcegraph.com