Net New ARR
Growth
Industry:
SaaS
Short Definition
Net New ARR is the change in Annual Recurring Revenue during a period. It’s the sum of New Logo ARR and Expansion ARR, minus Contraction ARR and Logo Churn ARR. Count changes on the effective (go-live) date, not when they’re signed (signed-for-later sits in CARR—Contracted ARR—until start).
Short Definition
Net New ARR is the change in Annual Recurring Revenue during a period. It’s the sum of New Logo ARR and Expansion ARR, minus Contraction ARR and Logo Churn ARR. Count changes on the effective (go-live) date, not when they’re signed (signed-for-later sits in CARR—Contracted ARR—until start).
Short Definition
Net New ARR is the change in Annual Recurring Revenue during a period. It’s the sum of New Logo ARR and Expansion ARR, minus Contraction ARR and Logo Churn ARR. Count changes on the effective (go-live) date, not when they’re signed (signed-for-later sits in CARR—Contracted ARR—until start).
Why it matters for Investors
Net growth signal: Shows whether the recurring base is growing or shrinking this period.
Planning & predictability: Links directly to next period’s ARR run-rate.
Go-To-Market (GTM) quality check: Breakout (New Logo vs Expansion vs Churn/Contraction) reveals what’s driving results.
Why it matters for Investors
Net growth signal: Shows whether the recurring base is growing or shrinking this period.
Planning & predictability: Links directly to next period’s ARR run-rate.
Go-To-Market (GTM) quality check: Breakout (New Logo vs Expansion vs Churn/Contraction) reveals what’s driving results.
Why it matters for Investors
Net growth signal: Shows whether the recurring base is growing or shrinking this period.
Planning & predictability: Links directly to next period’s ARR run-rate.
Go-To-Market (GTM) quality check: Breakout (New Logo vs Expansion vs Churn/Contraction) reveals what’s driving results.
Formula
Practical considerations -
Count when live: Use the effective start for New Logo and Expansion ARR and the effective end for Contraction and Churn ARR. Signed-not-live stays in CARR.
Split mixed changes once: Feature/tier drop → Down-sell (Contraction); seats/minimum/price cuts → Reduction (Contraction).
ARR only: Exclude one-time fees and uncommitted/overage usage (those are revenue, not ARR).
Reversals: If undone in the same period, net to $0; if undone later, record as Expansion (or Reactivation/New Logo if the account had fully churned).
Formula
Practical considerations -
Count when live: Use the effective start for New Logo and Expansion ARR and the effective end for Contraction and Churn ARR. Signed-not-live stays in CARR.
Split mixed changes once: Feature/tier drop → Down-sell (Contraction); seats/minimum/price cuts → Reduction (Contraction).
ARR only: Exclude one-time fees and uncommitted/overage usage (those are revenue, not ARR).
Reversals: If undone in the same period, net to $0; if undone later, record as Expansion (or Reactivation/New Logo if the account had fully churned).
Formula
Practical considerations -
Count when live: Use the effective start for New Logo and Expansion ARR and the effective end for Contraction and Churn ARR. Signed-not-live stays in CARR.
Split mixed changes once: Feature/tier drop → Down-sell (Contraction); seats/minimum/price cuts → Reduction (Contraction).
ARR only: Exclude one-time fees and uncommitted/overage usage (those are revenue, not ARR).
Reversals: If undone in the same period, net to $0; if undone later, record as Expansion (or Reactivation/New Logo if the account had fully churned).
Worked Example
Starting ARR (Feb 28): $1,200,000
Period: March (snapshot Mar 31)
Account | Event | Effective by Mar 31? | Account ARR @ Mar-31 ($) | Δ ARR in March ($) | Category | Notes |
|---|---|---|---|---|---|---|
A | New logo, annual $24,000, starts Mar 4 | Yes | $24,000 | +$24,000 | New Logo | Counts in New Logo |
B | New logo, annual $36,000, starts Apr 1 | No | $0 | $0 | Booking / CARR | Signed, starts next month |
C | Upsell on existing (+$18,000) eff. Mar 15 (prior $50,000) | Yes | $68,000 ($50,000 → $68,000) | +$18,000 | Expansion | Counts in Expansion |
D | Cancellation effective Mar 31 (prior $40,000) | Yes | $0 | −$40,000 | Logo Churn | Account to $0, included in Churn |
E | Year-2 ramp $20,000 → $35,000 on Mar 1 | Yes | $35,000 | +$15,000 | Expansion (ramp) | Counts in Expansion |
F | Downgrade: Enterprise $50,000 → Standard $42,000 (Mar 20) | Yes | $42,000 | −$8,000 | Contraction — Down-sell | Tier/plan downgrade (Included in Churn) |
G | Remove Analytics module ($6,000/yr) on Mar 25 (prior total $30,000) | Yes | $24,000 ($30,000 → $24,000) | −$6,000 | Contraction — Down-sell | Module removed; account still active |
Net New ARR (March): New Logo $24,000 + Expansion $33,000 − Contraction $14,000 − Logo Churn $40,000 = $3,000
ARR Bridge (March):
New Logo ARR: +$24,000 (A)
Expansion ARR: +$33,000 (C + E)
Contraction ARR: −$14,000 (F + G)
Logo Churn ARR: −$40,000 (D)
Net New ARR: +$3,000
Ending ARR (Mar 31): $1,200,000 + $3,
Notes:
B is signed for April → stays in CARR for March.
Show each flow separately (New Logo, Expansion, Contraction, Logo Churn); Net New ARR is the net of these.
Mixed amendments: split once between Down-sell (feature/tier) and Reduction (seats/minimum/price).
Ignore one-offs (credits/refunds); ARR tracks recurring commitments only.
Worked Example
Starting ARR (Feb 28): $1,200,000
Period: March (snapshot Mar 31)
Account | Event | Effective by Mar 31? | Account ARR @ Mar-31 ($) | Δ ARR in March ($) | Category | Notes |
|---|---|---|---|---|---|---|
A | New logo, annual $24,000, starts Mar 4 | Yes | $24,000 | +$24,000 | New Logo | Counts in New Logo |
B | New logo, annual $36,000, starts Apr 1 | No | $0 | $0 | Booking / CARR | Signed, starts next month |
C | Upsell on existing (+$18,000) eff. Mar 15 (prior $50,000) | Yes | $68,000 ($50,000 → $68,000) | +$18,000 | Expansion | Counts in Expansion |
D | Cancellation effective Mar 31 (prior $40,000) | Yes | $0 | −$40,000 | Logo Churn | Account to $0, included in Churn |
E | Year-2 ramp $20,000 → $35,000 on Mar 1 | Yes | $35,000 | +$15,000 | Expansion (ramp) | Counts in Expansion |
F | Downgrade: Enterprise $50,000 → Standard $42,000 (Mar 20) | Yes | $42,000 | −$8,000 | Contraction — Down-sell | Tier/plan downgrade (Included in Churn) |
G | Remove Analytics module ($6,000/yr) on Mar 25 (prior total $30,000) | Yes | $24,000 ($30,000 → $24,000) | −$6,000 | Contraction — Down-sell | Module removed; account still active |
Net New ARR (March): New Logo $24,000 + Expansion $33,000 − Contraction $14,000 − Logo Churn $40,000 = $3,000
ARR Bridge (March):
New Logo ARR: +$24,000 (A)
Expansion ARR: +$33,000 (C + E)
Contraction ARR: −$14,000 (F + G)
Logo Churn ARR: −$40,000 (D)
Net New ARR: +$3,000
Ending ARR (Mar 31): $1,200,000 + $3,
Notes:
B is signed for April → stays in CARR for March.
Show each flow separately (New Logo, Expansion, Contraction, Logo Churn); Net New ARR is the net of these.
Mixed amendments: split once between Down-sell (feature/tier) and Reduction (seats/minimum/price).
Ignore one-offs (credits/refunds); ARR tracks recurring commitments only.
Worked Example
Starting ARR (Feb 28): $1,200,000
Period: March (snapshot Mar 31)
Account | Event | Effective by Mar 31? | Account ARR @ Mar-31 ($) | Δ ARR in March ($) | Category | Notes |
|---|---|---|---|---|---|---|
A | New logo, annual $24,000, starts Mar 4 | Yes | $24,000 | +$24,000 | New Logo | Counts in New Logo |
B | New logo, annual $36,000, starts Apr 1 | No | $0 | $0 | Booking / CARR | Signed, starts next month |
C | Upsell on existing (+$18,000) eff. Mar 15 (prior $50,000) | Yes | $68,000 ($50,000 → $68,000) | +$18,000 | Expansion | Counts in Expansion |
D | Cancellation effective Mar 31 (prior $40,000) | Yes | $0 | −$40,000 | Logo Churn | Account to $0, included in Churn |
E | Year-2 ramp $20,000 → $35,000 on Mar 1 | Yes | $35,000 | +$15,000 | Expansion (ramp) | Counts in Expansion |
F | Downgrade: Enterprise $50,000 → Standard $42,000 (Mar 20) | Yes | $42,000 | −$8,000 | Contraction — Down-sell | Tier/plan downgrade (Included in Churn) |
G | Remove Analytics module ($6,000/yr) on Mar 25 (prior total $30,000) | Yes | $24,000 ($30,000 → $24,000) | −$6,000 | Contraction — Down-sell | Module removed; account still active |
Net New ARR (March): New Logo $24,000 + Expansion $33,000 − Contraction $14,000 − Logo Churn $40,000 = $3,000
ARR Bridge (March):
New Logo ARR: +$24,000 (A)
Expansion ARR: +$33,000 (C + E)
Contraction ARR: −$14,000 (F + G)
Logo Churn ARR: −$40,000 (D)
Net New ARR: +$3,000
Ending ARR (Mar 31): $1,200,000 + $3,
Notes:
B is signed for April → stays in CARR for March.
Show each flow separately (New Logo, Expansion, Contraction, Logo Churn); Net New ARR is the net of these.
Mixed amendments: split once between Down-sell (feature/tier) and Reduction (seats/minimum/price).
Ignore one-offs (credits/refunds); ARR tracks recurring commitments only.
Best Practices
Always show the split: New Logo vs Expansion vs Contraction vs Logo Churn—then the net.
Waterfall every period: Reconcile Starting ARR → Ending ARR via the four flows; avoid double counting.
Call out big movers: List top +/- accounts so readers see what drove the result.
Track signed-not-live separately: Keep a simple CARR list to explain what’s coming next period.
Best Practices
Always show the split: New Logo vs Expansion vs Contraction vs Logo Churn—then the net.
Waterfall every period: Reconcile Starting ARR → Ending ARR via the four flows; avoid double counting.
Call out big movers: List top +/- accounts so readers see what drove the result.
Track signed-not-live separately: Keep a simple CARR list to explain what’s coming next period.
Best Practices
Always show the split: New Logo vs Expansion vs Contraction vs Logo Churn—then the net.
Waterfall every period: Reconcile Starting ARR → Ending ARR via the four flows; avoid double counting.
Call out big movers: List top +/- accounts so readers see what drove the result.
Track signed-not-live separately: Keep a simple CARR list to explain what’s coming next period.
FAQs
Is Net New ARR the same as New ARR?
No. New ARR is inflows only (New Logo + Expansion). Net New ARR subtracts Contraction and Logo Churn.Can Net New ARR be negative?
Yes—if logo churn/ contractions are larger than new logos/expansion in the period.When do we count a change?
On the effective (go-live/end) date, not when the paper is signed.Do one-time fees or overage revenue count?
No. Only contracted, recurring ARR changes.How does Net New ARR relate to Ending ARR?
Ending ARR = Starting ARR + Net New ARR, if you ignore changes caused by currency movements or accounting reclassifications.
FAQs
Is Net New ARR the same as New ARR?
No. New ARR is inflows only (New Logo + Expansion). Net New ARR subtracts Contraction and Logo Churn.Can Net New ARR be negative?
Yes—if logo churn/ contractions are larger than new logos/expansion in the period.When do we count a change?
On the effective (go-live/end) date, not when the paper is signed.Do one-time fees or overage revenue count?
No. Only contracted, recurring ARR changes.How does Net New ARR relate to Ending ARR?
Ending ARR = Starting ARR + Net New ARR, if you ignore changes caused by currency movements or accounting reclassifications.
FAQs
Is Net New ARR the same as New ARR?
No. New ARR is inflows only (New Logo + Expansion). Net New ARR subtracts Contraction and Logo Churn.Can Net New ARR be negative?
Yes—if logo churn/ contractions are larger than new logos/expansion in the period.When do we count a change?
On the effective (go-live/end) date, not when the paper is signed.Do one-time fees or overage revenue count?
No. Only contracted, recurring ARR changes.How does Net New ARR relate to Ending ARR?
Ending ARR = Starting ARR + Net New ARR, if you ignore changes caused by currency movements or accounting reclassifications.
Related Metrics
Commonly mistaken for:
New Revenue (includes non-recurring items)
New ARR (inflows only)
CARR (signed but not live)
Related Metrics
Commonly mistaken for:
New Revenue (includes non-recurring items)
New ARR (inflows only)
CARR (signed but not live)
Related Metrics
Commonly mistaken for:
New Revenue (includes non-recurring items)
New ARR (inflows only)
CARR (signed but not live)
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