Net New ARR
The total amount of new Annual Recurring Revenue added during a period, accounting for new sales, expansion, contraction, and churn.
FORMULA
Net New ARR = New Logo ARR + Expansion ARR - Contraction ARR - Churned ARRWhy it matters
Net New ARR is the ultimate measure of period-over-period momentum. It answers the question: 'How much bigger is the business today than it was at the end of the last period?' Evaluating sales performance solely on New Logo ARR hides the damage caused by churn. Net New ARR forces the entire executive team to focus on the aggregate health of the revenue engine. A decline in Net New ARR, even while total ARR grows, is a leading indicator that growth is decelerating and requires immediate board-level attention.
2025 BENCHMARK
Benchmarkit Q4 2025 notes that top-quartile companies add at least 15% Net New ARR quarter-over-quarter.
COMMON MISTAKES
- Reporting Gross New ARR to the board instead of Net New ARR.
- Failing to isolate contraction ARR from churned ARR.
- Inconsistently applying currency exchange rates for international revenue across periods.