Metric guide · Revenue
Net new ARR
Short answer
Net new ARR is the change in annual recurring revenue over a period. It is calculated as new ARR plus expansion ARR, minus contraction ARR and churned ARR. It should equal ending ARR minus starting ARR, and keeping the four components separate shows whether growth came from new customers or existing ones.
The formula
Net new ARR = new ARR + expansion ARR − contraction ARR − churned ARR
Unit: US dollars. Better when it goes up.
How to calculate it
- Take ARR at the start and end of the period from the same source and definition.
- Classify each subscription change in the period as new, expansion, contraction or churn.
- Sum each category, then add new and expansion and subtract contraction and churn.
- Check that the result equals ending ARR minus starting ARR and investigate any gap.
Mistakes that distort it
Strong new sales can hide rising churn. Review the four components side by side, not just the total.
A customer who cancels and returns inside the period is often better treated as a churn reversal. Decide on a rule and apply it every period.
For customers billed in other currencies, exchange rate changes shift ARR without any customer action. Use fixed rates for the comparison or report the effect separately.
Where Sondola reads it from
Sondola reads this metric from Stripe, RevenueCat and Paddle, with the source and period on every reading. Each reading keeps where it came from, the period and the date it was recorded, and you can download all of it at any time.
See all 34 integrations →Questions
Can net new ARR be negative?
Yes. If contraction and churn exceed new and expansion ARR in a period, net new ARR is negative and ARR shrank.
Is net new ARR the same as bookings?
No. Bookings count signed contract value, which can include multi-year and one-time amounts. Net new ARR counts only the change in annualized recurring value.
Related metrics
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