TCV Growth Rate
The period-over-period percentage change in your total booked contract value, from the opening balance to the closing balance.
◆ Percentage
Formula
Built from
What it measures
The velocity at which your total booked contract value is expanding. Unlike counting deals — which ignores deal size — TCV Growth Rate tells you whether you are landing more contracts, signing larger ones, or both. Because it is a percentage, it is comparable across companies and segments with very different absolute deal sizes.
Why it matters
TCV Growth Rate is how you read deal momentum and pricing power in one number. A team booking 10% more contracts at half the value is shrinking, not growing — the rate exposes that where a raw deal count would hide it. Investors scrutinize it because larger contracts compound faster and pull cash forward. Finance leans on it to forecast cash collection and pipeline conversion. Operators watch it to confirm whether a strategy shift — moving upmarket, repricing, bundling — is actually working, or whether churn and shrinkage are quietly eroding the book.
How to read it
Read TCV Growth Rate as a trend, never a single number. Compare this period to the prior period, to your plan, and to your company stage. A positive rate means you booked more total contract value than last period; a falling rate (say 30% last quarter, 15% this one) is your cue to ask why — seasonality, a large customer churning mid-term, or slower sales execution. Always decompose the move into new TCV, expansion, and churn/downsell so you understand the driver, not just the result. Flat or negative growth is a red flag: audit the booking funnel, sales capacity, and retention before assuming it is noise.
What good looks like
Good
TCV growing period over period, driven by a healthy mix of new logos and expansion, with average deal size holding or rising and no single account carrying the result.
Watch
TCV growth decelerating versus prior periods, increasingly dependent on one or two large deals, or masking shrinking deal sizes.
Bad
Flat or negative TCV growth — cancellations, downsells, and smaller new deals are outpacing new bookings and expansion.
Watch-outs
- Ignoring the base. A 100% growth rate on $100K of starting TCV (adding $100K) is far less material than a 10% rate on $10M (adding $1M). Always pair the rate with the absolute TCV booked.
- Confusing month-over-month with year-over-year. A 5% MoM rate compounds to roughly 80% annually; a 50% YoY rate is only about 3.5% MoM. Be explicit about the time window or the number is meaningless.
- Ignoring the composition of the starting balance. If starting TCV includes a one-time mega-deal or a cohort about to churn mid-term, next period's rate looks artificially low. Separate recurring growth drivers from anomalies.
- Reading TCV growth without logo growth. A single large contract can hide churn among smaller accounts. Pair the rate with new-logo count and retention to see the full picture.
Worked example
Hypothetical
You close March with $2M in total booked TCV. In April your team books $500K of new-customer TCV and $200K of expansions, and loses $150K to churn and downsells. Closing April TCV is $2M + $500K + $200K − $150K = $2.55M, so April's TCV Growth Rate is ($2.55M − $2M) / $2M = $550K / $2M = 27.5%.