Churned Annual Recurring Revenue
The annualized recurring revenue lost when customers fully cancel their subscriptions, calculated as Churned MRR for the period times 12.
◆ Currency
Formula
Built from
What it measures
The annualized value of recurring revenue removed from the base when customers cancel outright. One-time fees, partial downgrades, and plan migrations are excluded — only full-account cancellations that drop a customer to $0 recurring count. It is the churn line of the ARR waterfall, expressed at annual scale.
Why it matters
Churned ARR puts the size of your retention leak in absolute annual dollars, the unit boards and investors actually price. It converts a vague "our churn is fine" into "we are losing $600K of ARR a year," which forces prioritization of the retention roadmap. It is the negative term that every ARR-growth forecast and the gross retention story is built on top of.
How to read it
Read Churned ARR as a trend, never a single snapshot, and always next to its rate. A high dollar figure does not mean a high churn rate — one large account leaving can spike it while logo count holds. Normalize against starting ARR to get your gross churn rate, then compare to net-new-arr: if Churned ARR is climbing while new and expansion stall, you have a retention crisis. Break it cohort-by-cohort to find where the leak lives.
What good looks like
Good
Churned ARR runs below 10% of starting ARR annually, with no single large account driving the number — a sign of durable retention.
Watch
Churned ARR is 10–20% of starting ARR, or is increasingly concentrated in a few high-ACV accounts; dig into cohort retention and renewal cause-codes.
Bad
Churned ARR exceeds 20% of starting ARR, eroding the base faster than new and expansion revenue can replace it.
Watch-outs
- Conflating dollars with rate. A 5% logo churn rate does not equal 5% Churned ARR — it depends on which accounts left. One high-ACV cancellation can spike Churned ARR even with low logo churn, so always read the dollars and the rate together.
- Including downgrades as churn. A customer dropping from $1K to $200/month is downsell, not churn — count only full-account cancellations, or you will double-count against Downsell ARR.
- Netting reactivations against churn. If a customer churns then returns, the churn still happened — record it, and book the return as New ARR. Netting them out erases the signal that your base is unstable.
- Summing monthly churn and then multiplying by 12. Churned ARR annualizes a single period's Churned MRR (×12); it is not the trailing-twelve-month total of churned MRR multiplied again — that double-counts.
Worked example
Hypothetical
In March, customers representing $50K of Churned MRR cancel outright. Annualizing that monthly loss gives $600K of Churned ARR — the run-rate revenue you would forfeit over a year if March's churn pace held.