How To Calculate Net Annual Recurring Revenue in Oracle EBS | Arithmix

Calculating net annual recurring revenue (NARR) is an essential task for any business looking to measure its financial performance. NARR is a metric that helps businesses understand how much revenue they can expect to generate from their existing customers over the course of a year. This calculation is particularly useful for businesses that operate on a subscription-based model, such as software as a service (SaaS) companies.

What Is Net Annual Recurring Revenue?

Net Annual Recurring Revenue is the total amount of revenue a business can expect to generate from its existing customers over the course of a year, after accounting for any cancellations or downgrades. This metric is calculated by taking the total value of all active subscriptions at the beginning of the year, subtracting any cancellations or downgrades that occur during the year, and adding any upgrades or new subscriptions that are acquired during the year. The resulting figure represents the net amount of revenue that the business can expect to generate from its existing customer base over the course of the year.

For example, if a SaaS company has 1,000 active subscriptions at the beginning of the year, each worth $100 per month, its annual recurring revenue (ARR) would be $1.2 million. If 50 customers cancel their subscriptions during the year, and 100 customers upgrade to a higher-priced plan, the company's NARR would be calculated as follows:

NARR = (1,000 x $100 x 12) - (50 x $100 x 12) + (100 x $150 x 12) = $1,260,000

When Is It Valuable To Calculate Net Annual Recurring Revenue?

Calculating NARR is valuable for any business that operates on a subscription-based model, as it provides a clear picture of the company's financial performance and growth potential. By tracking NARR over time, businesses can identify trends and make informed decisions about pricing, marketing, and product development.

NARR is also a useful metric for investors and analysts, as it provides insight into the long-term sustainability of a business. A high NARR indicates that a company has a loyal customer base and is generating predictable, recurring revenue, which can be a strong indicator of future growth potential.

In summary, calculating NARR is a critical task for any business that operates on a subscription-based model. By understanding this metric, businesses can make informed decisions about pricing, marketing, and product development, and investors can gain insight into the long-term sustainability of a business.

How Do You Calculate Net Annual Recurring Revenue in Oracle EBS

Oracle EBS itself isn’t naturally geared towards letting you calculate complex metrics like Net Annual Recurring Revenue. As an alternative, teams typically use products like Arithmix to import data from Oracle EBS and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like Oracle EBS, combine it with data from other systems, and create calculations like Net Annual Recurring Revenue.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating Net Annual Recurring Revenue in Arithmix

Calculating metrics like Net Annual Recurring Revenue is simple in Arithmix. Once you've created your free account, you’ll be able to import your Oracle EBS data, and use it to create natural language formulas for metrics like Net Annual Recurring Revenue.

Arithmix is designed to give you the power to build any calculations you want on top of your Oracle EBS data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.