Net New Contracted ARR
The net change in contracted annual recurring revenue over a period: new bookings and expansions minus contractions and churn.
◆ Currency
Formula
Built from
What it measures
The net dollar flow of contracted recurring bookings for the period — what you gained in new logos and expansions minus what you lost to downgrades and churn. It captures the raw output of your go-to-market engine on a signed-contract basis, before any cash is collected or revenue is recognized.
Why it matters
Net New CARR is the cleanest signal of whether your sales and customer success teams are actually winning. Contracts precede cash by weeks, and cash precedes recognized revenue by more, so this is a leading indicator boards watch to predict future ARR. It's also the numerator in two unit-economics tests investors run on you: burn multiple (cash burned ÷ net new CARR) and the SaaS magic number (net new CARR ÷ sales and marketing spend). If net new CARR is flat or negative, your unit economics are moot — there's no bookings engine to optimize.
How to read it
Read Net New CARR as a trend, not a single number. Positive means new and upsell bookings outran downgrades and churn this period; negative means your contracted base is shrinking and is a red flag regardless of how the income statement looks. Track it month-over-month or quarter-over-quarter to spot acceleration or deceleration, and divide by Starting CARR to convert it into a growth rate you can compare to plan. Always read it against churn: $1M of net new CARR built on $2M new minus $1M churn is a very different business than $1M new and zero churn.
What good looks like
Good
Net new CARR positive and trending up quarter-over-quarter, driven by both new logos and expansion, and comfortably covering cash burn.
Watch
Net new CARR flat or only modestly positive at a company claiming growth — often rising churn, falling win rates, or shrinking deal sizes offsetting volume.
Bad
Net new CARR negative or declining for consecutive quarters; customer losses outrun bookings and the contracted base is shrinking.
Watch-outs
- Judging health on net new CARR alone. Pair it with churn, CAC, and net new ARR — CARR is signed, not yet active, so you can post positive net new CARR while net new ARR goes negative if recently signed customers fail to go live or renew.
- Double-counting expansion. Upsell CARR and Downsell CARR must be mutually exclusive line items. If one customer upgrades one product and downgrades another, capture both flows separately — netting them inside a single line hides the real motion.
- Confusing flow with stock. Net new CARR is a flow (change over the period); Starting CARR and Closing CARR are stocks (balances at a point in time). Positive net new CARR simply means Closing CARR exceeds Starting CARR.
- Inconsistent contract-date convention. The period boundary is either signature date or start date depending on your policy — pick one and never switch, or month-to-month comparisons will mislead.
Worked example
Hypothetical
Acme closes $500K of new-logo contracts in Q2 (New CARR). Two customers expand by $100K (Upsell CARR), one downgrades by $30K (Downsell CARR), and three churn for $150K (Churned CARR). Net New CARR is $420K for the quarter.
Variants & windows
The same metric re-expressed by a mechanical transform — a trailing window, a growth rate, a per-unit scaling, or a book/segment cut. Each is computed from Net New Contracted ARR above.
- T12M Net New CARR Trailing 12-month
- T3M Net New CARR Trailing 3-month