New ARR
Growth
Industry:
SaaS
Aliases:
Short Definition
New ARR represents the total increase in annual recurring revenue that becomes effective in a given period,
from two sources—
(i) New Logo ARR (recurring revenue from new customers going live)
(ii)Expansion ARR (recurring revenue increases from existing customers).
It doesn’t include contraction or logo churn and is counted when effective (live), not when signed.
Short Definition
New ARR represents the total increase in annual recurring revenue that becomes effective in a given period,
from two sources—
(i) New Logo ARR (recurring revenue from new customers going live)
(ii)Expansion ARR (recurring revenue increases from existing customers).
It doesn’t include contraction or logo churn and is counted when effective (live), not when signed.
Short Definition
New ARR represents the total increase in annual recurring revenue that becomes effective in a given period,
from two sources—
(i) New Logo ARR (recurring revenue from new customers going live)
(ii)Expansion ARR (recurring revenue increases from existing customers).
It doesn’t include contraction or logo churn and is counted when effective (live), not when signed.
Why it matters for Investors
Growth momentum: Shows the pace of new ARR added from customer acquisitions and expansions.
Sales effectiveness: Indicates the success of new sales, upselling and cross-selling strategies.
Revenue forecast: Provides a baseline for projecting future recurring revenue, excluding churn and contraction impacts.
Why it matters for Investors
Growth momentum: Shows the pace of new ARR added from customer acquisitions and expansions.
Sales effectiveness: Indicates the success of new sales, upselling and cross-selling strategies.
Revenue forecast: Provides a baseline for projecting future recurring revenue, excluding churn and contraction impacts.
Why it matters for Investors
Growth momentum: Shows the pace of new ARR added from customer acquisitions and expansions.
Sales effectiveness: Indicates the success of new sales, upselling and cross-selling strategies.
Revenue forecast: Provides a baseline for projecting future recurring revenue, excluding churn and contraction impacts.
Formula
Practical considerations:
ARR scope: Include effective (go-live) New Logo ARR and Expansion ARR in the period; exclude contraction, logo churn, and uncommitted/overage usage.
Timing: Count when effective (live), not when signed (signed-not-live sits in CARR)
Consistency: Keep clear definitions for New Logo ARR and Expansion ARR; document handling of multi-year, ramps, and partial expansions.
Formula
Practical considerations:
ARR scope: Include effective (go-live) New Logo ARR and Expansion ARR in the period; exclude contraction, logo churn, and uncommitted/overage usage.
Timing: Count when effective (live), not when signed (signed-not-live sits in CARR)
Consistency: Keep clear definitions for New Logo ARR and Expansion ARR; document handling of multi-year, ramps, and partial expansions.
Formula
Practical considerations:
ARR scope: Include effective (go-live) New Logo ARR and Expansion ARR in the period; exclude contraction, logo churn, and uncommitted/overage usage.
Timing: Count when effective (live), not when signed (signed-not-live sits in CARR)
Consistency: Keep clear definitions for New Logo ARR and Expansion ARR; document handling of multi-year, ramps, and partial expansions.
Worked Example
Starting ARR (Feb 28): $1,200,000
Contract log (March):
Account | Event | Effective by Mar 31? | Renewal ARR contribution ($) | Δ ARR ($) | Category | Notes |
|---|---|---|---|---|---|---|
A | New logo, annual $24,000, | Yes | $24,000 | +$24,000 | New Logo | Counts in New ARR |
B | New logo, annual $36,000, | No | $0 | $0 | Booking/ CARR | Signed, not effective → |
C | Expansion on existing (+$18,000) | Yes | $68,000 | +$18,000 | Expansion | Counts in New ARR |
D | Cancellation effective Mar 31 (prior $40,000) | Yes | $0 | −$40,000 | Churn (Logo Churn) | Not part of New ARR |
E | Year-2 ramp $20,000 → | Yes | $35,000 | +$15,000 | Expansion (ramp) | Counts in New ARR |
New ARR (March): $57,000 = 24,000 (A) + 18,000 (C) + 15,000 (E)
ARR Bridge (March):
New ARR: +$57,000
Logo Churn (D): −$40,000
Contraction: $0
Net New ARR: +$17,000
Ending ARR (Mar 31): $1,200,000 + $17,000 = $1,217,000
Notes:
B (new logo $36k starting Apr 1) is Booking/CARR in March → excluded from New ARR.
D (cancellation) is Logo Churn, not part of New ARR.
New ARR always sums effective New Logo + Expansion only (no logo churn/contraction).
Worked Example
Starting ARR (Feb 28): $1,200,000
Contract log (March):
Account | Event | Effective by Mar 31? | Renewal ARR contribution ($) | Δ ARR ($) | Category | Notes |
|---|---|---|---|---|---|---|
A | New logo, annual $24,000, | Yes | $24,000 | +$24,000 | New Logo | Counts in New ARR |
B | New logo, annual $36,000, | No | $0 | $0 | Booking/ CARR | Signed, not effective → |
C | Expansion on existing (+$18,000) | Yes | $68,000 | +$18,000 | Expansion | Counts in New ARR |
D | Cancellation effective Mar 31 (prior $40,000) | Yes | $0 | −$40,000 | Churn (Logo Churn) | Not part of New ARR |
E | Year-2 ramp $20,000 → | Yes | $35,000 | +$15,000 | Expansion (ramp) | Counts in New ARR |
New ARR (March): $57,000 = 24,000 (A) + 18,000 (C) + 15,000 (E)
ARR Bridge (March):
New ARR: +$57,000
Logo Churn (D): −$40,000
Contraction: $0
Net New ARR: +$17,000
Ending ARR (Mar 31): $1,200,000 + $17,000 = $1,217,000
Notes:
B (new logo $36k starting Apr 1) is Booking/CARR in March → excluded from New ARR.
D (cancellation) is Logo Churn, not part of New ARR.
New ARR always sums effective New Logo + Expansion only (no logo churn/contraction).
Worked Example
Starting ARR (Feb 28): $1,200,000
Contract log (March):
Account | Event | Effective by Mar 31? | Renewal ARR contribution ($) | Δ ARR ($) | Category | Notes |
|---|---|---|---|---|---|---|
A | New logo, annual $24,000, | Yes | $24,000 | +$24,000 | New Logo | Counts in New ARR |
B | New logo, annual $36,000, | No | $0 | $0 | Booking/ CARR | Signed, not effective → |
C | Expansion on existing (+$18,000) | Yes | $68,000 | +$18,000 | Expansion | Counts in New ARR |
D | Cancellation effective Mar 31 (prior $40,000) | Yes | $0 | −$40,000 | Churn (Logo Churn) | Not part of New ARR |
E | Year-2 ramp $20,000 → | Yes | $35,000 | +$15,000 | Expansion (ramp) | Counts in New ARR |
New ARR (March): $57,000 = 24,000 (A) + 18,000 (C) + 15,000 (E)
ARR Bridge (March):
New ARR: +$57,000
Logo Churn (D): −$40,000
Contraction: $0
Net New ARR: +$17,000
Ending ARR (Mar 31): $1,200,000 + $17,000 = $1,217,000
Notes:
B (new logo $36k starting Apr 1) is Booking/CARR in March → excluded from New ARR.
D (cancellation) is Logo Churn, not part of New ARR.
New ARR always sums effective New Logo + Expansion only (no logo churn/contraction).
Best Practices
Accurate tracking: Use billing and CRM systems to monitor new and expansion revenue.
Show the split: Always report New Logo ARR and Expansion ARR separately, then total them as New ARR. This makes growth drivers clear. Initial value from a first-time customer = New Logo. Any increase after go-live (even same month) = Expansion.
Handle ramps right: For pre-agreed step-ups, add only the step-up when it becomes effective (treat as Expansion (ramp)).
Regular updates: Recalculate New ARR with each reporting period or significant sales event.
Segment for insight: Break New ARR by channel, region, customer size (SMB/mid/enterprise), product, and for Expansion also by driver (upsell, cross-sell, add-on).
Call out concentration: Track how much New ARR comes from your top 5–10 accounts to spot dependency risk.
Automate triggers for Expansion: Flag accounts that hit usage limits, request locked features, or approach renewal—prime targets for upsell/cross-sell.
Count when live: Use the effective (go-live) date only. Keep a separate list for CARR (Contracted ARR signed for a future start).
Growth strategy: Use New ARR to assess sales pipeline and customer expansion efforts.
Best Practices
Accurate tracking: Use billing and CRM systems to monitor new and expansion revenue.
Show the split: Always report New Logo ARR and Expansion ARR separately, then total them as New ARR. This makes growth drivers clear. Initial value from a first-time customer = New Logo. Any increase after go-live (even same month) = Expansion.
Handle ramps right: For pre-agreed step-ups, add only the step-up when it becomes effective (treat as Expansion (ramp)).
Regular updates: Recalculate New ARR with each reporting period or significant sales event.
Segment for insight: Break New ARR by channel, region, customer size (SMB/mid/enterprise), product, and for Expansion also by driver (upsell, cross-sell, add-on).
Call out concentration: Track how much New ARR comes from your top 5–10 accounts to spot dependency risk.
Automate triggers for Expansion: Flag accounts that hit usage limits, request locked features, or approach renewal—prime targets for upsell/cross-sell.
Count when live: Use the effective (go-live) date only. Keep a separate list for CARR (Contracted ARR signed for a future start).
Growth strategy: Use New ARR to assess sales pipeline and customer expansion efforts.
Best Practices
Accurate tracking: Use billing and CRM systems to monitor new and expansion revenue.
Show the split: Always report New Logo ARR and Expansion ARR separately, then total them as New ARR. This makes growth drivers clear. Initial value from a first-time customer = New Logo. Any increase after go-live (even same month) = Expansion.
Handle ramps right: For pre-agreed step-ups, add only the step-up when it becomes effective (treat as Expansion (ramp)).
Regular updates: Recalculate New ARR with each reporting period or significant sales event.
Segment for insight: Break New ARR by channel, region, customer size (SMB/mid/enterprise), product, and for Expansion also by driver (upsell, cross-sell, add-on).
Call out concentration: Track how much New ARR comes from your top 5–10 accounts to spot dependency risk.
Automate triggers for Expansion: Flag accounts that hit usage limits, request locked features, or approach renewal—prime targets for upsell/cross-sell.
Count when live: Use the effective (go-live) date only. Keep a separate list for CARR (Contracted ARR signed for a future start).
Growth strategy: Use New ARR to assess sales pipeline and customer expansion efforts.
FAQs
What is included in New ARR?
New Logo ARR + Expansion ARR that are contractually recurring and effective in the period (count when live, not when signed).Can New ARR decrease?
Yes, compared to prior periods, due to fewer new logos or reduced expansions.How is churn handled?
Excluded from New ARR. Churn reduces Net New ARR, not New ARR.Is it the same as Net New ARR?
No. Net New ARR = New ARR − (Contraction ARR + Logo Churn ARR).What if an expansion is partial?
Include only the incremental ARR that started this period in New ARR.
FAQs
What is included in New ARR?
New Logo ARR + Expansion ARR that are contractually recurring and effective in the period (count when live, not when signed).Can New ARR decrease?
Yes, compared to prior periods, due to fewer new logos or reduced expansions.How is churn handled?
Excluded from New ARR. Churn reduces Net New ARR, not New ARR.Is it the same as Net New ARR?
No. Net New ARR = New ARR − (Contraction ARR + Logo Churn ARR).What if an expansion is partial?
Include only the incremental ARR that started this period in New ARR.
FAQs
What is included in New ARR?
New Logo ARR + Expansion ARR that are contractually recurring and effective in the period (count when live, not when signed).Can New ARR decrease?
Yes, compared to prior periods, due to fewer new logos or reduced expansions.How is churn handled?
Excluded from New ARR. Churn reduces Net New ARR, not New ARR.Is it the same as Net New ARR?
No. Net New ARR = New ARR − (Contraction ARR + Logo Churn ARR).What if an expansion is partial?
Include only the incremental ARR that started this period in New ARR.
Related Metrics
Commonly mistaken for:
Net New ARR (Includes churn adjustment)
Total ARR (Cumulative recurring revenue, not just new growth)
New Logo ARR (Doesn’t include expansion)
Related Metrics
Commonly mistaken for:
Net New ARR (Includes churn adjustment)
Total ARR (Cumulative recurring revenue, not just new growth)
New Logo ARR (Doesn’t include expansion)
Related Metrics
Commonly mistaken for:
Net New ARR (Includes churn adjustment)
Total ARR (Cumulative recurring revenue, not just new growth)
New Logo ARR (Doesn’t include expansion)
Index