Pro Forma Income Statement: How to Build One (SaaS Example and Template)

A pro forma income statement is a projected or as-if profit and loss statement: revenue, costs and profit under a set of assumptions instead of closed books. Companies build one to plan the next years, compare scenarios, raise money or a loan, or show what last year would have looked like if an acquisition had already closed.

Most guides show a pro forma built by growing last year's sales by a percentage and keeping every cost as a percent of sales. That works for a shop. It does not work for a subscription company, where next year's revenue is mostly decided by the ARR you already have, the customers you will lose and the expansion you will sell. This guide builds the statement the way a SaaS finance team should: from an ARR bridge, with a range of scenarios, a reconciliation from adjusted numbers back to GAAP, and a free template that does all of it.

What is a pro forma income statement?

A pro forma income statement is an income statement prepared on assumptions: either a projection of future years or a restatement of past results as if a transaction had already happened. The two uses share a format and a name, and they answer different questions. The first column is what most people searching for a pro forma income statement need: a three-year projected P&L for a plan, a fundraise or a loan. The second matters when you buy or sell a business. The last two columns explain why a pro forma is never presented as if it were the company's reported results.

What does a pro forma income statement include?

It includes the same lines as your actual income statement, from revenue down to net income, plus the assumptions that produce each line. Keeping the lines identical to your actual P&L is what makes the pro forma useful later, because each year you can put actual results next to the plan line by line. For a SaaS company the lines, and the driver behind each one, look like this. Two lines carry most of the weight. Revenue sets the size of everything else, and sales and marketing is usually the largest cost. That is why the revenue build deserves more care than any other part of the statement.

How do you create a pro forma income statement?

Start from the last year of actual results, project revenue from an ARR bridge, project each cost from a driver, then run the same statement for a low, base and high case. Eight steps:

1. Close the base year. Enter the last full year of actuals and the ending ARR of that year. The pro forma starts where the books end, so the first projected year has a real number to grow from. The profit and loss statement template holds the same SaaS lines for actuals month by month.
2. Build the ARR bridge by quarter. Beginning ARR, plus new-logo ARR, plus expansion, minus churn and contraction, equals ending ARR. New-logo ARR comes from pipeline, win rate and rep capacity; the method is in how to build a driver-based revenue forecast. Forecast renewals and expansion separately from new business: renewal amounts and dates are mostly known in advance, new business is not.
3. Spread bookings by quarter. Bookings do not arrive evenly. Across ORM customers, Q4 is typically the largest quarter, followed by Q2, then Q3, then Q1. A flat 25% per quarter overstates revenue in a year when most bookings land late.
4. Turn ARR into revenue. Subscription revenue for a quarter is roughly the average of beginning and ending ARR, divided by four, because a deal signed mid-quarter only earns part of the quarter. ARR is not revenue, and the gap between them is covered in ARR vs GAAP revenue.
5. Project costs from drivers. Cost of revenue from gross margin, sales and marketing from the bookings it has to buy, R&D and G&A from headcount or a share of revenue. Write the driver next to every line.
6. Finish below the line. Depreciation and amortization, interest income and expense, and tax on positive pretax income.
7. Run the range. Change only the revenue drivers between a low, base and high case, and let the costs that depend on them move too.
8. Label it and reconcile it. Head every page "pro forma", list the assumptions, and if you show adjusted EBITDA or non-GAAP operating income, show the bridge from the GAAP line.

Pro forma income statement example: a SaaS company at $8M ARR

Below is an illustrative three-year pro forma for a B2B SaaS company that ended its base year, FY2026, with $8,000,000 of ARR and $7,700,000 of revenue. Every number is made up to show the mechanics, and the same company is in the example download, so you can trace each figure to a formula.

The base case assumes $2,000,000, $2,400,000 and $2,800,000 of new-logo ARR in the three years, 12% annual expansion and 10% annual churn and contraction on beginning ARR, both applied a quarter at a time. New bookings land 20%, 26%, 22% and 32% in Q1 to Q4, which follows the quarter order ORM sees across customers.

First, the ARR bridge that drives revenue:

One quarter shows how revenue comes out of it. In Q1 FY2027 the company starts at $8,000,000, books $400,000 of new ARR (20% of $2,000,000), adds $240,000 of expansion (12% / 4) and loses $200,000 (10% / 4), ending at $8,440,000. Subscription revenue for the quarter is ($8,000,000 + $8,440,000) / 2 / 4 = $2,055,000. Four quarters of that add up to $9,004,184 for the year. The retention row is approximate because quarterly expansion and churn also apply to customers won earlier in the same year; a cohort-based net revenue retention would differ slightly.

Then the pro forma income statement itself:

The drivers behind the cost lines: subscription gross margin of 81%, which is the Benchmarkit 2025 median; services sold at 25% of new-logo ARR and delivered at a 25% margin; $1.60 of sales and marketing for every $1 of new-logo ARR and $0.80 for every $1 of expansion; R&D falling from 24% to 20% of revenue and G&A from 15% to 13%. The tax line uses only the 21% federal corporate rate from IRS Publication 542, with no state tax and no loss carryforwards, which a real company with past losses would use to lower its tax bill.

How to read it:

• Revenue lags ARR. The company exits FY2027 with $10.2M of ARR and books $9.5M of revenue, because new ARR only earns revenue from the day it starts. A pro forma that sets revenue equal to ending ARR overstates the year.
• Sales and marketing follows bookings, not revenue. At $1.60 per dollar of new ARR, this company spends less than the Benchmarkit median New CAC Ratio of $2.00 and the median Expansion CAC Ratio of $1.00. Even so, S&M is 42.5% of revenue in FY2027, above the 37% median, because it is paying for ARR that turns into revenue over the next years. At the median ratios instead, FY2029 sales and marketing would be $7,259,973 and EBITDA would be -$491,483.
• Profit comes from the cost lines that scale. Gross margin barely moves. EBITDA goes from -6.5% to 6.4% of revenue mostly because R&D and G&A grow slower than revenue. If those percentages are a hope rather than a hiring plan, the pro forma is too.

What the low and high cases show

A board should see the plan as a range, so the template runs three cases that change only new-logo ARR, expansion and churn. In ORM's experience, a board trusts a forecast that is consistent, traceable and framed with a realistic range: a low case, an on-target case and an upper bound. The low case here books about 20% less new ARR, expands at 9% and churns 13%. The high case books about 20% more, expands at 15% and churns 8%. The low case earns the most profit. It books less, so it spends less on sales and marketing, and the lost growth only shows up in ARR. Ending ARR is $3.4M lower than the base case, and with net revenue retention under 100% the existing customer base is shrinking. A pro forma that shows only net income would make the weakest plan look like the best one. Put ending ARR and retention on the same page as the profit lines, and every pro forma tells you what the profit costs in growth.

How do you calculate pro forma revenue, costs and net income?

Each line is one formula on top of a driver. These are the formulas the template uses, written for one year with the inputs in named cells. Keep all the inputs on one tab and formulas everywhere else. When someone asks where a number came from, you can point to the driver in one click, and you can change a driver without editing a formula.

What rules apply to pro forma, GAAP and non-GAAP numbers?

A pro forma statement for internal planning has no required format, but the moment a public company shows adjusted or as-if numbers to investors, SEC rules decide how. Two sets of rules matter.

The first is Regulation G, for non-GAAP financial measures such as adjusted EBITDA. 17 CFR 244.101 defines a non-GAAP financial measure as a numerical measure of historical or future performance that excludes amounts included in, or includes amounts excluded from, the most directly comparable GAAP measure. When a public company discloses one, 17 CFR 244.100 requires it to present the most directly comparable GAAP measure and a quantitative reconciliation between the two. For forward-looking measures the reconciliation is required "to the extent available without unreasonable efforts". The same section bars presenting a non-GAAP measure in a way that is misleading.

The second is Article 11 of Regulation S-X, for transaction pro formas. 17 CFR 210.11-01 requires pro forma financial information when, among other cases, a significant business acquisition or disposition has occurred or is probable. 17 CFR 210.11-02 sets the form: condensed historical statements in columns, transaction accounting adjustments that depict the accounting for the deal, and optional management's adjustments for synergies and dis-synergies, each of which needs a reasonable basis. The pro forma statement of comprehensive income covers only the most recent fiscal year and the interim period since.

A private SaaS company does not file under either rule. Following the same habits still pays off with a board or a lender: label adjusted numbers, keep them next to the GAAP number, and show the bridge. In the example, the reconciliation looks like this.

Adjusted EBITDA turns positive a year before EBITDA does, and in FY2029 it is $1.7M against $632,405 of net income. Both numbers are correct. Showing only the adjusted one is how a pro forma loses a board's trust.

Transaction pro forma example: adding an acquisition

A transaction pro forma restates last year as if the deal had closed on the first day, by adding the target's historical results and the accounting the deal creates. Suppose the same company buys a smaller SaaS business with $1,500,000 of revenue, records $2,400,000 of acquired intangibles amortized over six years, and borrows $3,000,000 at 8% to pay for it. All figures are illustrative. The transaction adjustments are mechanical: a year of amortization ($2,400,000 / 6 = $400,000), a year of interest ($3,000,000 x 8% = $240,000), and the tax effect of both at 21% (-$640,000 x 21% = -$134,400). The target was profitable on its own, and the combined company loses more than the buyer did alone, because the deal adds amortization and interest. The management's adjustment, $150,000 of seller costs that stop after closing, sits in its own column so a reader can take it or leave it. If the combined company could not use the tax benefit because of its losses, set the tax rate on the adjustments to 0% in the template.

What goes in each tab of the template?

Six tabs: one to explain, one for inputs, the quarterly ARR bridge, the pro forma statement, a scenario comparison and an acquisition pro forma. Yellow cells are inputs, grey cells are formulas. The checks on the Pro forma P&L tab confirm that the ARR bridge ties every year, that subscription revenue ties to the bridge, that the quarter weights add to 100% and that the low case never ends above the base case. The blank file has the same formulas with empty inputs. For a monthly model with a headcount roster and cash, use the financial forecast template; for cash by billing term and collection timing, the cash flow forecast template. If a lender asks for a pro forma balance sheet and cash flow statement that tie to this plan, carry the same drivers into a three statement model.

What mistakes make a pro forma income statement misleading?

Most misleading pro formas grow revenue by a percentage and hide the assumptions. These are the ones I see most in SaaS plans. The last one is the most common reason a forecast misses. Something in the business or the market changes, a competitor puts pressure on price, buyers take longer to decide, territories get reshuffled, and the plan keeps running on old assumptions. A pro forma is only as current as its drivers.

Where does ORM fit?

A pro forma income statement is only as good as its revenue line, and in a SaaS company the revenue line is the sales forecast plus retention. ORM builds forecast models for B2B SaaS companies from CRM and finance data, forecasts new business, renewals and expansion separately, and targets 95% forecast accuracy from day 1 to day 90 of the quarter. That gives finance a current set of revenue drivers to put into the pro forma instead of last quarter's guesses. See sales forecasting software for how it works on your own data.

Sources

All checked on October 25, 2026.

• Benchmarkit, 2025 SaaS Performance Metrics Benchmarks: median gross margin 77% on total revenue, 81% on subscription and 30% on professional services; sales and marketing 37%, R&D 34% and G&A 24% of revenue; median revenue growth 26%; New CAC Ratio median $2.00 and Expansion CAC Ratio median $1.00.
• SEC Regulation G, 17 CFR 244.100 and 17 CFR 244.101: definition of a non-GAAP financial measure, the comparable GAAP measure and reconciliation requirement.
• SEC Regulation S-X Article 11, 17 CFR 210.11-01 and 17 CFR 210.11-02: when pro forma financial information is required, columnar form, transaction accounting adjustments, management's adjustments and periods.
• IRS, Publication 542, Corporations: the 21% corporate income tax rate.
• ORM Technologies, observations across its customer base: quarter seasonality, renewals forecast separately from new business, presenting a forecast as a range.