Expansion ARR, or Expansion MRR, refer 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’ 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.
- $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.