Methodology
Metric definitions
Ending ARR = Beginning ARR + New logo ARR + Expansion ARR + Cross-sell ARR − Downsell ARR − Churned ARR. Beginning ARR plus new logo, expansion, and cross-sell ARR less downsell and churned ARR. Every movement is traced to a customer record, not estimated from aggregate ARR lines.
GRR = (Beg ARR − Downsell − Churn) ÷ Beg ARR. Retention views calculated from agreed customer cohorts and revenue definitions. GRR is capped at 100%; it excludes expansion to isolate base durability.
NRR = (Beg ARR + Expansion + Cross-sell − Downsell − Churn) ÷ Beg ARR. NRR captures the full revenue movement from the existing customer base including upsell and cross-sell. Values above 100% indicate net expansion from the base.
Concentration = Top N customer ARR ÷ Total ARR. Top customer contribution, account movement, and long-tail durability trends. Concentration analysis covers both revenue and logo-count exposure by tier.
LTV = ACV × Gross Margin ÷ Annual Customer Churn Rate | CAC Payback (months) = CAC ÷ (ACV × Gross Margin) × 12. Computed only where the client has reliable acquisition cost, gross margin, churn, and cohort data. Period conventions should stay consistent if monthly ARPA and monthly churn are used instead.
Cohort retention(t) = Revenue(t) from cohort ÷ Revenue(0) from cohort. Tracks the revenue percentage retained from each customer cohort year over year. Output includes vintage analysis to compare cohort quality across acquisition periods.
ARR bridge — illustrative
Source quality
Customer identity matching across CRM, billing, ERP, GL, contract, and spreadsheet exports.
Product naming and SKU consistency before product-level revenue cuts are trusted.
Partial-period and fiscal-calendar handling for monthly, quarterly, and annual views.
Recurring versus non-recurring revenue flags when the source data supports them.
Metric definitions and source exceptions kept visible for deal-team review.
Definition governance
Parent-child account matching, legal-entity names, customer IDs, duplicate accounts, and acquired customer mappings are documented before metrics are trusted.
Revenue, ARR, MRR, bookings, billings, services, usage, refunds, credits, FX, and one-time items must be explicitly defined.
Cohorts can be based on first purchase, subscription start, contract start, first invoice, or management-defined vintage; the chosen policy is disclosed.
Calendar months, fiscal periods, LTM cuts, partial periods, renewal windows, and stub periods are aligned before trend analysis.
Unmapped customers, duplicate products, missing renewal dates, inconsistent currency, and unreconciled totals are captured for review.
Outputs are analytical support. Deal teams and their advisers should review assumptions, definitions, and exceptions before relying on the pack.
Professional boundary
Output role
AnalyticsDiligence workflow support built from source-mapped records.Professional advice
NoNot investment, legal, tax, accounting, credit, valuation, or securities advice.Review standard
RequiredOutputs should be reviewed by the client and its advisers.Reliance basis
DefinitionsMetric assumptions and data caveats stay visible for challenge.