Dominik Hergeth
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Case study · Fernbridge Analytics

The profitable company that nearly ran out of cash

Company
B2B SaaS workflow and analytics platform, subscription revenue, seed-funded
Data
24 months of raw data: P&L, balance sheet, MRR waterfall, cohort grids and headcount by department
Methods
Excel three-statement model (cash flow via the indirect method), runway analysis, cohort retention, 12-month cohort forecast

Fernbridge Analytics is a fictional company. I designed the dataset and the problem myself, built the three statements from the raw data, and wrote a memo to the founder.

The question

“Revenue looks healthy on the surface. What changed in this business over 24 months, what does it mean for cash, and what decision should the founder make, and by when?”

The brief

Bottom line

Fernbridge has two structural problems. It hired aggressively as soon as it posted its first profitable month, which pushed it into a cash crisis. And its existing customers are starting to shrink, so growth depends more and more on winning new ones.

Profitability has since stabilised and the business now generates cash. That makes this the right moment to fix retention and put rules around hiring, before the next shock arrives.

ARR
$4.93M
Gross margin
82.6%
CAC payback
5.3 months
Net revenue retention
95.4%

How I got there

  1. Build the cash picture, not just the P&L

    The raw data only had line items, so I first built the income statement, balance sheet and cash flow statement and tied them together. The P&L on its own tells a success story: steady growth and a first profitable month in Month 11. The cash flow statement tells a different one.

    Cash balanceEnd of month, $
    Show data

  2. Line up the cash with the hiring

    Right after that first profitable month, headcount roughly doubled, from 11 to 23 over ten months. Monthly operating expenses rose from $115K to $254K. Costs grew faster than revenue, so net income went negative again in four of the next six months, and operating cash flow didn’t turn positive until Month 19.

    Cash fell from $83K to a low of $40K in Month 18. Measured on trailing burn, runway looked like about six months. But the company was holding $40K while spending around $240K a month on operating costs.

    HeadcountTotal employees, end of month
    Show data (by department)

  3. Check whether the new hires paid off

    Most of the new hires went into Sales & Marketing (3 to 8 people) and R&D (4 to 9). Sales & Marketing spend grew about 2.5 times, but new MRR grew only about 1.65 times. Each dollar spent on acquisition now brings in about a third less new revenue than before the hiring started.

    Spend vs. what it brought inIndexed, Month 14 = 100
    Show data

  4. Look past the headline growth

    ARR kept climbing, which hides a weakening base of existing customers. Net revenue retention was above 100% for seventeen straight months. Then it fell to 94.1% in Month 19 and 95.4% in Month 24, each time because an entire cohort churned (27 and 31 customers). Expansion from existing customers is too small to make up for losses like that.

    Net revenue retentionMonthly, %
    Show data

  5. Check capacity where the problem is

    Customers grew from 17 to 580, but Customer Success grew only from one person to three. That’s nearly 200 customers per person. The team closest to the churn problem is the one that barely grew.

    Turning pointHiring went into acquisition, where each extra dollar was bringing in less, and not into keeping the customers the company already had.

Why it’s easy to miss

Every headline metric looks healthy: ARR is growing, gross margin is above 80%, CAC payback is about five months, and the company now generates cash. The crisis only shows up in the balance sheet and cash flow statement, and the retention problem only shows up month by month and cohort by cohort. Averages hide both.

The memo

What’s working

  • Gross margin has been above 80% for more than a year.
  • Burn multiple is healthy: the business now generates more cash than it burns.
  • CAC payback averaged about 5.5 months over the last two quarters.

What’s breaking

  • Net revenue retention: existing customers aren’t expanding much, and whole cohorts are churning.
  • Churn: two entire cohorts have left in recent months.
  • Return on hiring: extra spend on Sales & Marketing and R&D didn’t bring a matching increase in growth.

Why this matters now

  • NRR has already dropped below 100% twice in six months. If it stays there, the existing customer base shrinks, and growth depends entirely on new customers, just as acquisition is getting more expensive.

Recommendation

  • Retention first. Find out why customers churn and cut back, and invest in Customer Success. Nearly 200 customers per person isn’t sustainable.
  • Hire in step with revenue. Headcount costs should grow in proportion to revenue, not ahead of it. That is what caused the cash crisis.
  • Fix acquisition efficiency before spending more on it, with a 30/60/90-day plan:
  1. First 30 daysFreeze further hiring. Analyse funnel performance by source, rep, segment and cohort to find where conversion broke down.
  2. Days 30–90Cut ineffective channels, move strong people to the most valuable segments, improve sales process and enablement, and set clear productivity targets.
  3. After 90 daysIf new hires still aren’t producing, consider reducing headcount or replacing low performers, and shift budget to channels with better returns.