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

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 [email protected] 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’22

  • Introduce a financial forecasting and close process that allows for timely and accurate reporting
  • 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 2022

  • : 01 February, 2021 - 30 April, 2021
  • : 01 May, 2021 - 31 July, 2021
  • : 01 August, 2021 - 31 October, 2021
  • : 01 November, 2021 - 31 January, 2022

Sources of truth

Definitions

ARR

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.

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)

Financial Planning and Financial Statement Review

We update our financial plan on a quarterly basis. Our plan covers a twelve-month period and is focused on providing insights into working capital management, as well as predicting and understanding key trends within our business.

We work with the head of each department in order to update the financial plan.

Following month two of every quarter, we complete a detailed dive in the current quarter actuals versus plan. Our philosophy is to compare our forecasts to results, so that we can constantly improve our forecasting methodologies and approaches to hold ourselves accountable. Additionally, this process drives accountability to the business owners of the budget. We focus on variances that exceed both 5% and $20k thresholds. We use this exercise to determine completeness over our financial statement close process, and also to understand if there is any activity causing fluctuations that we will need to revise on a go-forward basis. This exercise is completed at week 3 and 4 of the Month 3, in a given quarter. Once the quarter is closed, we also complete a detailed review of our plan vs. actual results. This analysis is completed at both a departmental level and a GL account level. We provide detailed explanations for variances that exceed both 5% and $20k thresholds.

We also complete a balance sheet review. This review is focused on providing analysis on key financial statement line items such as Cash, AR, AP, Accruals, and Deferred Revenue. We have a number of methods for analyzing the activity on these accounts.

Accounting

We work with an outsourced accounting firm named Officengine. They close the books monthly and produce our financial statements, and provide support in processing payables, preparing taxes, filing corporate registrations, and more.

Reach out to the Finance team for an introduction if needed.

Accounts Payable & Expenses

Accounts Receivable

Fixed Assets