Definition

Annual Recurring Revenue that is earned for a new customer (i.e. a customer account that is newly opened with the company) is classified as New ARR.

Example

Suppose, Vareto enters into a 3-year, $15M contract with a new customer that it hasn’t yet worked with. Therefore, New ARR is $5M.

Why it matters

New ARR is an important metric as it highlights how efficiently and easily a company is able to attract new customers every year.

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