New Annual Recurring Revenue

What it measures

The monthly recurring revenue won from logos you didn't have at period start, multiplied by 12. It counts only subscription value from net-new customers — never upgrades to existing accounts, and never one-time setup, services, or usage fees. This is the annualized run-rate contribution of your acquisition engine alone.

Why it matters

New ARR cuts through monthly churn noise and sizes your acquisition effort at an annual scale. Investors watch it because it shows whether you're building new revenue fast enough to outrun churn and keep compounding. Your sales leader watches it because it's the cleanest read on whether the new-business pipeline is delivering against quota — the inflow side of every growth model.

How to read it

Read New ARR as a trend, never a single number. Compare it to plan and to the prior-year period to strip out seasonality. A New ARR curve that consistently outruns churn and downgrades is the signature of a healthy growth company. Two months of flat or declining New ARR is a yellow flag — drill into pipeline, win rates, and deal size before it shows up in total ARR. Remember New ARR is gross: it tells you nothing about retention on its own.

What good looks like

Watch-outs

• Counting expansion as new. Upgrades, cross-sells, and add-ons to existing customers are upsell ARR, not New ARR — mixing them inflates your acquisition engine and hides whether new logos are actually landing.
• Annualizing one month with no trailing context. A single large deal can spike New MRR and New ARR; read the trailing three or six months to see the real pace before you celebrate or panic.
• Counting full contract value instead of annual value. A two-year, $24K deal is $12K of New ARR, not $24K — annualize it or you'll double-count the second year.
• Treating New ARR as a net or retention number. It's pure gross inflow; pair it with churned ARR and Net New ARR or you'll mistake a leaky business for a growing one.

Worked example