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Expansion ARR

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Expansion ARR, or Expansion MRR, refers to the combined revenue from all new subscriptions, upgrades, upsells, cross-sells, and bookings from an existing customer. Unlike “New ARR,” the expansion metric is used to determine a business’s ability to grow existing customer accounts. 

Expansion ARR can be calculated by subtracting the total expansion ARR at year-end from the total expansion ARR at the beginning of the year. Divide the result by the beginning year ARR and multiply by 100 to output a percentage.

For example,

  • $30,000 Expansion ARR in Q1
  • $50,000 Expansion ARR in Q4

$50k – $30k = $20k

$20k / $30k * 100 = 66%

In the above example, we would see a 66% Expansion ARR rate.

What is Expansion ARR?
Source: Visible.vc

How to Calculate Expansion ARR:

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Expansion ARR

Expansion ARR measures revenue growth from existing customers through upgrades, cross-sells, and upsells. In contrast, New ARR tracks revenue from brand-new customer accounts. When used together, you can see both acquisition and retention-driven growth.