How many new users each existing user generates
The viral coefficient (K-factor) measures how many new users each existing user brings in. K = (invites sent per user) × (conversion rate of those invites). A K-factor above 1 means exponential, self-sustaining growth; below 1 means growth requires ongoing acquisition spend.
If each user invites 5 people and 30% convert, K = 1.5. Your user base multiplies with each cycle. Dropbox's referral program achieved K > 1 by giving storage as the reward.