A SaaS (Software as a Service) income statement, also known as a Profit and Loss (P&L) statement, is a financial document that summarizes a company's revenues, costs, and expenses over a specific period, typically a month, quarter, or year. It provides a clear picture of the company's financial performance and its ability to generate profit.
Key components of a SaaS income statement generally include:
- Revenue: This is the total money earned from sales of subscriptions, product tiers, or other services. For SaaS companies, revenue is often recognized using accrual-based accounting, meaning it's recorded when earned, even if cash hasn't been received yet.
- Cost of Goods Sold (COGS): These are the direct costs associated with delivering and maintaining the software product or service. For SaaS, this can include cloud hosting, infrastructure, customer support tools, and sometimes customer success costs.
- Gross Profit: Calculated by subtracting COGS from revenue, this indicates the profit before accounting for operating expenses. SaaS companies often have high gross margins due to the low marginal cost of distributing new licenses.
- Operating Expenses: These are costs not directly related to delivering the core product but necessary for running the business. They typically include:
- Sales and Marketing (e.g., salaries, advertising)
- Research and Development (e.g., software development costs)
- General and Administrative (e.g., rent, utilities, administrative salaries)
- Operating Income (EBIT - Earnings Before Interest and Taxes): This is the profit from a company's core operations after deducting operating expenses.
- Non-Operating Income/Expenses: These include revenues or costs from activities outside the primary business operations, such as interest income or expense.
- Net Income: The "bottom line," calculated by subtracting all expenses (including taxes and interest) from total revenue.
SaaS Startup Inc.
Income Statement
For the Quarter Ended September 30, 2025
Revenue
- Subscription Revenue: $500,000
- Professional Services Revenue: $50,000
- Total Revenue: $550,000
Cost of Goods Sold (COGS)
- Cloud Hosting & Infrastructure: $40,000
- Customer Support Salaries: $30,000
- Software Licenses (for internal use): $5,000
- Total Cost of Goods Sold: $75,000
Gross Profit: $475,000
Operating Expenses
- Sales & Marketing:
- Salaries & Commissions: $100,000
- Advertising & Promotions: $40,000
- Research & Development:
- Developer Salaries: $120,000
- Software & Tools: $15,000
- General & Administrative:
- Salaries & Benefits: $60,000
- Rent & Utilities: $10,000
- Office Supplies: $2,000
- Legal & Accounting: $8,000
- Total Operating Expenses: $355,000
Operating Income (EBIT): $120,000
Other Income / (Expenses)
- Interest Expense: ($2,000)
- Net Other Income / (Expenses): ($2,000)