What is Net New ARR?
Net new ARR is the bottom line of recurring revenue movement: everything gained minus everything lost, annualized.
It resists the flattery of gross new bookings, because a great new-sales quarter can still produce weak net new ARR if churn and contraction are high.
Short answer
Net new ARR is the total change in annual recurring revenue during a period, calculated as new-business ARR plus expansion ARR minus churned and contracted ARR. It captures the real recurring growth of a subscription business in one figure, which is why it, rather than gross new bookings, is the metric SaaS companies and investors watch most closely for growth.
Key takeaways
- Change in ARR: new plus expansion minus churn and contraction.
- Captures real recurring growth in one figure.
- The core SaaS growth metric.
- Gross bookings can hide weak net new ARR.
Why it matters
Net new ARR is what actually grows a subscription business, so it drives valuation and planning. Watching only gross new bookings can mask churn quietly eroding the base, which net new ARR exposes.
How Ardovo handles it
Ardovo forecasts and tracks net new ARR by combining new-business, expansion, and churn views, so Rook can show real recurring growth and flag when churn or contraction is undercutting strong new sales.
Frequently asked questions
How do you calculate net new ARR?
Add new-business ARR and expansion ARR, then subtract churned and contracted ARR for the period. The result is the net change in annual recurring revenue, the real recurring growth of the business.
Why is net new ARR important?
Because it captures real recurring growth in one figure, which is what drives SaaS valuation and planning. Gross new bookings can look strong while high churn and contraction quietly erode the base, which net new ARR exposes.
What is the difference between net new ARR and bookings?
Bookings count total contract value signed, including one-time and multi-year amounts, and ignore churn. Net new ARR tracks the net change in recurring annualized revenue, subtracting churn and contraction, so it reflects true recurring growth.