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The net percentage change in Annual Recurring Revenue (ARR) over a specified period.
Explanation of metric
Net ARR Growth Rate measures the overall growth or decline in the recurring revenue by factoring in all new revenue sources, reactivations, upgrades, free-to-paid transitions, and reductions from cancellations, downgrades, and paused subscriptions. This metric is essential for understanding your business’s ability to expand its recurring revenue base while managing churn and downgrades.
How it's measured
Net ARR Growth Rate = {[(New ARR) + (Reactivations ARR) + (Upgrades ARR) + (Free-to-paid ARR) + (Resumed ARR) ]- [(Cancellation ARR) + (Downgrade ARR) + (Paused ARR) + (Active to Trial ARR)]/(ARR at the beginning of period)} * 100
Reading
An upward trend indicates healthy revenue growth driven by increased upgrades, reactivations, or new customer acquisition.
Example
For a given period:
Example Data:
Positive ARR Changes: Positive ARR Changes = 3,000+500+1,500+200+300 = 5,500
Negative ARR Changes: Negative ARR Changes = 2,000+700+300+200 = 3,200
Net ARR Change: Net ARR Change = 5,500−3,200 = 2,300
Net ARR Growth Rate: Net ARR Growth Rate= (50,000/2,300)×100 = 4.6%
The Net ARR Growth Rate for this example is 4.6%, indicating a positive revenue trend over the period.
The Annual Recurring Revenue (ARR) earned from subscriptions that converted from free to paid plans during a specific period.
Explanation of metric
Total Free to Paid ARR represents the annualized value of recurring revenue generated from customers transitioning from free-tier plans to paid subscriptions. It provides insights into how effectively free plans are being converted into revenue-generating customers.
How it's measured
Total Free to Paid ARR = Total Free to Paid MRR * 12
Note:
This does not include IN TRIAL to ACTIVE conversions.
Reading
An upward trend indicates increased success in converting free-tier users into paid customers, reflecting effective engagement and upselling strategies.
Interpretation
Total Free to Paid ARR is crucial for understanding how free-tier offerings contribute to recurring revenue growth. Higher values indicate that the free tier is effectively driving customer acquisition and monetization. You can use this metric to assess the success of their freemium strategy and identify opportunities for optimization.
Example
For a given period:
The ratio of revenue earned from new subscriptions to revenue earned from existing customers through expansions.
Explanation of metric
The New-to-Expansion Ratio measures the proportion of revenue growth that comes from acquiring new customers versus expanding revenue from your existing customer base. A balanced ratio provides insights into the effectiveness of both acquisition and upselling strategies, highlighting how much your growth relies on attracting new customers compared to maximizing value from current ones.
How it's measured
New to Expansion Ratio = New MRR / (New MRR + Expansion MRR)
Reading
A higher ratio indicates a stronger focus on acquiring new customers relative to revenue growth from existing customers.
Interpretation
The New to Expansion Ratio helps businesses balance their acquisition and expansion strategies. A higher ratio might indicate strong customer acquisition but could point to missed opportunities for upselling. Conversely, a lower ratio could signal dependence on existing customers, emphasizing the need to diversify growth efforts through new customer acquisition.
Example
For a given period:
A summary of customer movements over a specific period, including new, downgraded, churned, paused, and future customers.
Explanation of metric
This metric represents the total number of customers at the end of a given period, taking into account the new customers acquired, churned customers, customers who downgraded to free plans, paused customers, and future customers. This metric provides a clear picture of overall customer growth or loss during the period and helps assess customer retention and acquisition efforts.
How it's measured
End Customers = Beginning Customers + New Paid Customers - Churn Customers - Downgrade to Free Customers
Reading
An upward trend indicates customer base growth due to successful acquisition and retention strategies and effective management of paused and future customers.
Interpretation
The End Customers metric provides a snapshot of overall customer health and business performance. It helps assess how well the company retains existing customers, acquires new ones, and manages churn, downgrades, and pauses. Tracking this metric ensures that businesses can make informed decisions about customer engagement strategies and forecast future growth.
Example
For a given period:
A summary of Annual Recurring Revenue (ARR) movements over time, accounting for new revenue, upgrades, churn, and other key adjustments during a specific period.
Explanation of metric
Closing ARR reflects the total recurring revenue at the end of a period by summarizing all revenue additions and reductions. It provides a comprehensive view of how ARR evolves due to factors such as new customer acquisitions, upgrades, downgrades, cancellations, and currency or exchange rate adjustments. This metric helps businesses monitor overall ARR growth and identify underlying drivers of change.
How it's measured
Closing ARR = [(Opening ARR) + (New ARR) + (Currency Change ARR) + (Upgrade ARR) + (Free to Paid ARR) + (Pause to Paid ARR) + (Reactivation ARR) - (Cancellation ARR) - (Downgrade ARR) - (Active to Trial ARR) - (Paused ARR) +/- (Exchange rate fluctuations during the period)]
Reading
An upward trend indicates ARR growth due to successful customer acquisition, upgrades, and minimized cancellations or downgrades.
Interpretation
Closing ARR serves as a key indicator of a company’s subscription revenue health. By analyzing its components, businesses can identify drivers of ARR growth or decline, make informed decisions on customer retention strategies, and assess the impact of global or currency fluctuations on revenue.
Example
For a given period:
The Closing ARR for the period is $562,000, reflecting the net recurring revenue at the end of the period after accounting for all movements.
A summary of the movement of individual Annual Recurring Revenue (ARR) components over time.
Explanation of metric
ARR Component Movements provides a detailed breakdown of the factors contributing to changes in ARR over a specific period. It includes additions like new customer revenue, upgrades, and reactivations, as well as reductions from cancellations, downgrades, and paused subscriptions. This metric enables businesses to analyze how each component impacts overall ARR, offering insights into subscription revenue dynamics and areas for growth or improvement.
How it's measured
ARR Drill Down = [(Opening ARR) + (New ARR) + (Currency Change ARR) + (Upgrade ARR) + (Free to Paid ARR) + (Pause to Paid ARR) + (Reactivation ARR) - (Cancellation ARR) - (Downgrade ARR) - (Active to Trial ARR) - (Paused ARR) +/- (Exchange rate fluctuations during the period)]
Reading
An upward trend in specific components (e.g., New ARR or Upgrade ARR) indicates growth drivers such as effective acquisition or upselling strategies.
Interpretation
ARR Component Movements offer granular insights into the factors influencing recurring revenue. By breaking down the contributions and reductions of each component, businesses can identify opportunities for improvement, optimize customer retention strategies, and ensure sustainable ARR growth.
Example
For a given period:
Cancellation ARR: $20,000
Downgrade ARR: $10,000
Exchange rate adjustment: $5,000
Closing ARR = 500,000+30,000+15,000−20,000−10,000+5,000 = 520,000
The Closing ARR for the period is $520,000, which showcases the net impact of each ARR component's movement during the period.
A summary of the average revenue generated per user (ARPU) over a specific period, providing detailed insights into revenue dynamics such as gains from new users and losses from churned users.
Explanation of metric
ARPU Drill Down measures the changes in average revenue per user by analyzing how ARPU evolves due to new customer additions and churned users. This metric offers a granular understanding of revenue growth or decline, helping businesses identify the underlying factors influencing their ARPU. It is a valuable tool for tracking customer revenue contributions and optimizing pricing strategies.
How it's measured
End ARPU = Beginning ARPU + New ARPU - Churn ARPU
Reading
An upward trend in ARPU Drill Down indicates increased revenue contributions from users, driven by new user additions or successful upselling strategies.
Interpretation
The ARPU Drill Down metric provides a detailed view of how average revenue per user changes over time. It is critical for understanding the effectiveness of customer acquisition and retention efforts and the impact of pricing models on revenue. By analyzing this metric, businesses can optimize their strategies to maximize ARPU growth.
The total Annual Recurring Revenue (ARR) segmented by subscription plans, providing a detailed breakdown of revenue contributions from each plan.
Explanation of metric
Total ARR by Plan calculates the annualized revenue generated from each subscription plan. It includes recurring components such as base plans, addons, and coupons. Non-recurring components are also included based on the settings configured in Chargebee. This metric offers a clear view of how each plan contributes to overall ARR, helping businesses assess plan performance and optimize pricing strategies.
How it's measured
Total ARR by Plan = (12 x Total MRR per plan)
Note:
ARR is calculated from MRR which includes recurring subscription components such as plans, addons, coupons, and non-recurring components based on the settings configured in Chargebee.
Reading
An upward trend indicates strong growth or retention within specific subscription plans, suggesting their increasing value to customers.
Interpretation
Total ARR by Plan helps businesses understand the contribution of each subscription plan to their overall recurring revenue. By analyzing this metric, companies can identify high-performing plans, optimize underperforming ones, and make strategic decisions about pricing and packaging.
The total value of invoices generated during a specific period, segmented by the customers' geographic locations.
Explanation of metric
Total Invoice Amount by Geography provides insights into the revenue generated across different countries or regions. This metric helps businesses understand geographic trends, identify high-performing markets, and evaluate the impact of regional strategies. By breaking down invoice amounts by location, you can better align their efforts to maximize revenue in key areas.
How it's measured
Revenue by Geo = Total Invoice amount generated during the period segmented by the country
Reading
An upward trend in a specific geography indicates growing revenue and customer activity in that region.
Interpretation
The Total Invoice Amount by Geography metric highlights regional performance, enabling businesses to track revenue distribution and identify opportunities for expansion or improvement. It is particularly useful for tailoring marketing and sales strategies to specific markets and understanding regional customer behavior.
Example
For a given period:
The Total Invoice Amount for the period is $100,000, with $50,000 from the United States, $20,000 from Canada, and $30,000 from Germany, reflecting regional revenue contributions.
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