Renewal ARR
Growth
Industry:
SaaS
Aliases:
Short Definition
Renewal ARR is the baseline recurring dollars retained when existing customers renew during a period. It excludes the change at renewal (upsell/down-sell) and excludes new customers and churn.
Short Definition
Renewal ARR is the baseline recurring dollars retained when existing customers renew during a period. It excludes the change at renewal (upsell/down-sell) and excludes new customers and churn.
Short Definition
Renewal ARR is the baseline recurring dollars retained when existing customers renew during a period. It excludes the change at renewal (upsell/down-sell) and excludes new customers and churn.
Why it matters for Investors
Baseline retention: Shows the recurring dollars that carry into the new term (before any upsell/down-sell).
Forecast visibility: Higher Renewal ARR improves confidence in next-period ARR and cash flow.
Renewal execution: Trends highlight the effectiveness of renewal / customer success motions.
Why it matters for Investors
Baseline retention: Shows the recurring dollars that carry into the new term (before any upsell/down-sell).
Forecast visibility: Higher Renewal ARR improves confidence in next-period ARR and cash flow.
Renewal execution: Trends highlight the effectiveness of renewal / customer success motions.
Why it matters for Investors
Baseline retention: Shows the recurring dollars that carry into the new term (before any upsell/down-sell).
Forecast visibility: Higher Renewal ARR improves confidence in next-period ARR and cash flow.
Renewal execution: Trends highlight the effectiveness of renewal / customer success motions.
Formula
Practical considerations:
What to count: The baseline dollars kept when a contract renews and goes live in the period. Any increase = Expansion, any decrease = Contraction, and no renewal to $0 = Logo Churn (not Renewal ARR).
When to count: Use the effective date (go-live/start), not the signature date. Signed-not-live renewals stay in CARR (Contracted ARR — starts later) until they begin.
Edge cases to document: How you handle multi-year renewals, early co-terms, partial renewals, grace periods, and non-renewals—write it down so it’s applied the same way every time.
Formula
Practical considerations:
What to count: The baseline dollars kept when a contract renews and goes live in the period. Any increase = Expansion, any decrease = Contraction, and no renewal to $0 = Logo Churn (not Renewal ARR).
When to count: Use the effective date (go-live/start), not the signature date. Signed-not-live renewals stay in CARR (Contracted ARR — starts later) until they begin.
Edge cases to document: How you handle multi-year renewals, early co-terms, partial renewals, grace periods, and non-renewals—write it down so it’s applied the same way every time.
Formula
Practical considerations:
What to count: The baseline dollars kept when a contract renews and goes live in the period. Any increase = Expansion, any decrease = Contraction, and no renewal to $0 = Logo Churn (not Renewal ARR).
When to count: Use the effective date (go-live/start), not the signature date. Signed-not-live renewals stay in CARR (Contracted ARR — starts later) until they begin.
Edge cases to document: How you handle multi-year renewals, early co-terms, partial renewals, grace periods, and non-renewals—write it down so it’s applied the same way every time.
Worked Example
Starting ARR (Feb 28): $1,200,000 Period:
March (snapshot Mar 31)
Account | Event | Effective by Mar 31? | Renewal ARR contribution ($) | Δ ARR ($) | Category | Notes |
|---|---|---|---|---|---|---|
A | Renewal $50,000, same terms, starts Mar 10 | Yes | $50,000 | $0 | Renewal (flat) | Baseline retained; no change |
B | Renewal $80,000 → $60,000 | Yes | $60,000 | −$20,000 | Renewal + Contraction | Retained $60k; $20k drop is Contraction |
C | Renewal $100,000 with +$25,000 expansion | Yes | $100,000 | +$25,000 | Renewal + Expansion | Baseline $100k; $25k upsell is Expansion |
D | $40,000 contract expired, not renewed | Yes | $0 | −$40,000 | Logo Churn | Entire logo lost |
E | New logo $36,000 starting Mar 5 | Yes | $0 | +$36,000 | New Logo | New customer, not renewal |
Renewal ARR (March, baseline retained):
$210,000 = $50,000 (A) + $60,000 (B) + $100,000 (C)
ARR bridge (March):
New Logo: +$36,000 (E)
Expansion: +$25,000 (C)
Contraction: −$20,000 (B)
Logo Churn: −$40,000 (D)
Net change: +$1,000
Ending ARR (Mar 31): $1,200,000 + $1,000 = $1,201,000
Notes:
Renewal ARR is the baseline kept; it isn’t added in the bridge—only changes (Expansion/Contraction/Logo Churn/New Logo) move total ARR.
Count on the effective date; signed-not-live stays in CARR.
Worked Example
Starting ARR (Feb 28): $1,200,000 Period:
March (snapshot Mar 31)
Account | Event | Effective by Mar 31? | Renewal ARR contribution ($) | Δ ARR ($) | Category | Notes |
|---|---|---|---|---|---|---|
A | Renewal $50,000, same terms, starts Mar 10 | Yes | $50,000 | $0 | Renewal (flat) | Baseline retained; no change |
B | Renewal $80,000 → $60,000 | Yes | $60,000 | −$20,000 | Renewal + Contraction | Retained $60k; $20k drop is Contraction |
C | Renewal $100,000 with +$25,000 expansion | Yes | $100,000 | +$25,000 | Renewal + Expansion | Baseline $100k; $25k upsell is Expansion |
D | $40,000 contract expired, not renewed | Yes | $0 | −$40,000 | Logo Churn | Entire logo lost |
E | New logo $36,000 starting Mar 5 | Yes | $0 | +$36,000 | New Logo | New customer, not renewal |
Renewal ARR (March, baseline retained):
$210,000 = $50,000 (A) + $60,000 (B) + $100,000 (C)
ARR bridge (March):
New Logo: +$36,000 (E)
Expansion: +$25,000 (C)
Contraction: −$20,000 (B)
Logo Churn: −$40,000 (D)
Net change: +$1,000
Ending ARR (Mar 31): $1,200,000 + $1,000 = $1,201,000
Notes:
Renewal ARR is the baseline kept; it isn’t added in the bridge—only changes (Expansion/Contraction/Logo Churn/New Logo) move total ARR.
Count on the effective date; signed-not-live stays in CARR.
Worked Example
Starting ARR (Feb 28): $1,200,000 Period:
March (snapshot Mar 31)
Account | Event | Effective by Mar 31? | Renewal ARR contribution ($) | Δ ARR ($) | Category | Notes |
|---|---|---|---|---|---|---|
A | Renewal $50,000, same terms, starts Mar 10 | Yes | $50,000 | $0 | Renewal (flat) | Baseline retained; no change |
B | Renewal $80,000 → $60,000 | Yes | $60,000 | −$20,000 | Renewal + Contraction | Retained $60k; $20k drop is Contraction |
C | Renewal $100,000 with +$25,000 expansion | Yes | $100,000 | +$25,000 | Renewal + Expansion | Baseline $100k; $25k upsell is Expansion |
D | $40,000 contract expired, not renewed | Yes | $0 | −$40,000 | Logo Churn | Entire logo lost |
E | New logo $36,000 starting Mar 5 | Yes | $0 | +$36,000 | New Logo | New customer, not renewal |
Renewal ARR (March, baseline retained):
$210,000 = $50,000 (A) + $60,000 (B) + $100,000 (C)
ARR bridge (March):
New Logo: +$36,000 (E)
Expansion: +$25,000 (C)
Contraction: −$20,000 (B)
Logo Churn: −$40,000 (D)
Net change: +$1,000
Ending ARR (Mar 31): $1,200,000 + $1,000 = $1,201,000
Notes:
Renewal ARR is the baseline kept; it isn’t added in the bridge—only changes (Expansion/Contraction/Logo Churn/New Logo) move total ARR.
Count on the effective date; signed-not-live stays in CARR.
Best Practices
Keep an upcoming renewals list: A simple sheet for the next 30/60/90 days with customer, renewal date, current ARR, and status.
Name one person responsible: For each renewal, write down who will handle it (one clear owner).
Check health early: 30–60 days before the date, look at usage and open issues; plan the customer conversation.
Tag the outcome and reason: After renewal, mark flat / expand / contract / logo churn and add a short reason (e.g., budget, low usage, price, product fit).
Set a simple discount limit: Agree on a maximum discount for renewals; note any exceptions.
Double-check totals: Make sure the monthly summary matches your change log (no double counting).
Best Practices
Keep an upcoming renewals list: A simple sheet for the next 30/60/90 days with customer, renewal date, current ARR, and status.
Name one person responsible: For each renewal, write down who will handle it (one clear owner).
Check health early: 30–60 days before the date, look at usage and open issues; plan the customer conversation.
Tag the outcome and reason: After renewal, mark flat / expand / contract / logo churn and add a short reason (e.g., budget, low usage, price, product fit).
Set a simple discount limit: Agree on a maximum discount for renewals; note any exceptions.
Double-check totals: Make sure the monthly summary matches your change log (no double counting).
Best Practices
Keep an upcoming renewals list: A simple sheet for the next 30/60/90 days with customer, renewal date, current ARR, and status.
Name one person responsible: For each renewal, write down who will handle it (one clear owner).
Check health early: 30–60 days before the date, look at usage and open issues; plan the customer conversation.
Tag the outcome and reason: After renewal, mark flat / expand / contract / logo churn and add a short reason (e.g., budget, low usage, price, product fit).
Set a simple discount limit: Agree on a maximum discount for renewals; note any exceptions.
Double-check totals: Make sure the monthly summary matches your change log (no double counting).
FAQs
What is included in Renewal ARR?
The baseline dollars kept when a contract renews and starts in the period (effective date).Can Renewal ARR decrease?
It can be lower than last period if fewer contracts renew or they renew at smaller amounts. The drop on a specific contract is recorded as Contraction (smaller deal) or Logo Churn (to $0), not as “negative Renewal ARR.”How are expansions handled?
The extra amount above the old baseline is Expansion, not Renewal ARR.Is it the same as Total ARR?
No. Renewal ARR is just the renewed baseline portion of Total ARR.What if a renewal is partial?
Count the kept portion in Renewal ARR. The lost portion is Contraction (and if the customer goes to $0, it’s Logo Churn).
FAQs
What is included in Renewal ARR?
The baseline dollars kept when a contract renews and starts in the period (effective date).Can Renewal ARR decrease?
It can be lower than last period if fewer contracts renew or they renew at smaller amounts. The drop on a specific contract is recorded as Contraction (smaller deal) or Logo Churn (to $0), not as “negative Renewal ARR.”How are expansions handled?
The extra amount above the old baseline is Expansion, not Renewal ARR.Is it the same as Total ARR?
No. Renewal ARR is just the renewed baseline portion of Total ARR.What if a renewal is partial?
Count the kept portion in Renewal ARR. The lost portion is Contraction (and if the customer goes to $0, it’s Logo Churn).
FAQs
What is included in Renewal ARR?
The baseline dollars kept when a contract renews and starts in the period (effective date).Can Renewal ARR decrease?
It can be lower than last period if fewer contracts renew or they renew at smaller amounts. The drop on a specific contract is recorded as Contraction (smaller deal) or Logo Churn (to $0), not as “negative Renewal ARR.”How are expansions handled?
The extra amount above the old baseline is Expansion, not Renewal ARR.Is it the same as Total ARR?
No. Renewal ARR is just the renewed baseline portion of Total ARR.What if a renewal is partial?
Count the kept portion in Renewal ARR. The lost portion is Contraction (and if the customer goes to $0, it’s Logo Churn).
Related Metrics
Commonly mistaken for:
New Logo ARR (ARR from new customers, not renewals)
Expansion ARR (ARR increases from existing customer, not renewals)
Churn ARR (ARR lost, not retained)
Related Metrics
Commonly mistaken for:
New Logo ARR (ARR from new customers, not renewals)
Expansion ARR (ARR increases from existing customer, not renewals)
Churn ARR (ARR lost, not retained)
Related Metrics
Commonly mistaken for:
New Logo ARR (ARR from new customers, not renewals)
Expansion ARR (ARR increases from existing customer, not renewals)
Churn ARR (ARR lost, not retained)
Source of:
Index