SaaS ARR Calculator

ARR = MRR × 12 (or the sum of normalised annual contract values). ARR walk: Beginning ARR + New + Expansion − Contraction − Churned = Ending ARR. Net New ARR = New + Expansion − Contraction − Churned. NRR = (Beginning + Expansion − Contraction − Churned) ÷ Beginning. Quick Ratio = (New + Expansion) ÷ (Contraction + Churned).

ARR, MRR and the ARR walk

Annual recurring revenue is the run-rate of your recurring subscriptions, annualised — the revenue you would book over a year if nothing changed from today. The simplest way to get it is MRR × 12, or by summing every active contract’s normalised annual value. But ARR as a point-in-time number tells you almost nothing on its own; what a board wants is the ARR walk — how you moved from last period’s ARR to this one. Beginning ARR, plus new-customer ARR and expansion from existing customers, minus contraction (downgrades) and churn (cancellations), equals ending ARR. The difference is net new ARR, the single best measure of a period’s commercial output, and the calculator draws the whole thing as the waterfall every SaaS deck uses.

Worked example — the ARR walk: Beginning 1,000,000 + New 300,000 + Expansion 200,000 − Contraction 40,000 − Churned 80,000 = Ending 1,380,000. Net new ARR = 300,000 + 200,000 − 40,000 − 80,000 = 380,000 (a 38% year).

Retention: NRR and GRR

The two retention metrics read straight off the walk, and they’re the ones investors scrutinise most. Net revenue retention (NRR) measures what happens to a cohort of existing customers — their starting ARR plus expansion, minus contraction and churn, divided by their starting ARR — and crucially excludes new business. Above 100% is the gold standard: it means your existing customers grow faster than they leave, so the base compounds even before you sell to anyone new. That “negative churn” is what lets the best SaaS companies grow efficiently. Gross revenue retention (GRR) is the stricter cousin — it ignores expansion entirely, so it can never exceed 100% and shows the pure leakage from downgrades and cancellations. A high GRR (90%+ for enterprise) means the base is sticky; a low one means you’re refilling a leaky bucket.

The quick ratio ties the movements together as an efficiency gauge: (new + expansion) ÷ (contraction + churn). It asks how many dollars of growth you generate for every dollar you lose. A ratio of 4 or above is considered healthy for a growing SaaS business — you’re adding four dollars for each one that leaks away.

Growth, the Rule of 40 and committed ARR

ARR growth rate — net new ARR over the beginning balance — is the headline pace, but growth alone can be bought with unprofitable spending, so the Rule of 40 pairs it with profitability: growth rate plus profit margin should total at least 40. A company growing 30% at a 10% margin scores 40 and passes; one growing 60% while burning 30% also scores 30 and fails. It’s a rough but durable shorthand for whether growth is being funded sensibly. Finally, committed ARR (CARR) adds signed-but-not-yet-live contracts to live ARR — useful because a large backlog of committed revenue is real value that bookings-based ARR misses. Enter several periods of history to see the trend and the year-over-year rates, and remember that all of these are run-rate snapshots, not booked revenue. Educational tool only, not investment advice.