What is ARR Forecast?
For a subscription business, ARR is the number that matters, and forecasting it means projecting every force that moves it: new deals, expansions, and losses.
An ARR forecast that only looks at new business is dangerously incomplete, because expansion and churn can swing net ARR as much as new sales do.
Short answer
An ARR forecast projects how annual recurring revenue will change over a period, combining new-business ARR, expansion, and contraction or churn. For subscription companies it is the central forward metric, because it captures net recurring revenue movement rather than one-time bookings. Accurate ARR forecasting requires forecasting new sales, expansion, and churn together, not just new deals.
Key takeaways
- Projects change in annual recurring revenue.
- Combines new business, expansion, and churn.
- The core forward metric for subscription companies.
- Requires forecasting all three ARR movements together.
Why it matters
Net ARR growth is what drives subscription valuations and planning. Forecasting only new business ignores expansion and churn, which can turn a strong new-sales quarter into flat or negative net growth.
How Ardovo handles it
Ardovo forecasts new-business, expansion, and churn ARR together from live pipeline and account data, so Rook can project net ARR movement rather than just new deals and flag when churn or contraction threatens net growth.
Frequently asked questions
What is an ARR forecast?
It projects how annual recurring revenue will change over a period by combining new-business ARR, expansion, and contraction or churn. It is the central forward metric for subscription businesses because it captures net recurring movement.
Why include churn in an ARR forecast?
Because net ARR growth is what matters, and churn plus contraction can offset a strong new-sales quarter. An ARR forecast that ignores churn and expansion overstates growth and misleads planning.
How is an ARR forecast different from a bookings forecast?
A bookings forecast counts total contract value signed, including one-time and multi-year amounts. An ARR forecast tracks the recurring annualized value and its net change from new business, expansion, and churn.