How To Calculate Net ARR in Drift | Arithmix

Calculating net ARR (Annual Recurring Revenue) in Drift is a straightforward process that can help businesses understand their revenue streams and make informed decisions about their growth strategies. Net ARR is a key metric that measures the total annual recurring revenue generated by a business after accounting for any cancellations or downgrades. By calculating net ARR, businesses can get a more accurate picture of their revenue potential and make data-driven decisions about their future plans.

What Is Net ARR?

Net ARR is a metric that measures the total annual recurring revenue generated by a business after accounting for any cancellations or downgrades. It is calculated by subtracting the total value of cancellations and downgrades from the total value of new sales and upgrades over a given period. This metric is particularly useful for businesses that rely on recurring revenue streams, such as subscription-based services or software-as-a-service (SaaS) companies.

Net ARR is a more accurate measure of a business's revenue potential than gross revenue, as it takes into account the impact of customer churn. By measuring net ARR, businesses can get a better understanding of their revenue streams and identify areas for improvement.

When Is It Valuable To Calculate Net ARR?

Calculating net ARR is valuable for businesses of all sizes and industries, but it is particularly important for those that rely on recurring revenue streams. SaaS companies, for example, can use net ARR to measure the success of their subscription-based business model and identify areas for improvement. By tracking net ARR over time, SaaS companies can identify trends and make data-driven decisions about their pricing, product offerings, and customer retention strategies.

Net ARR is also valuable for businesses that are looking to scale and grow. By understanding their net ARR, businesses can identify areas where they can increase revenue and invest in growth strategies. For example, if a business has a high churn rate, they may need to invest in customer retention strategies to reduce cancellations and increase net ARR.

In summary, calculating net ARR is a valuable metric for businesses that rely on recurring revenue streams. By measuring net ARR, businesses can get a more accurate picture of their revenue potential and make data-driven decisions about their future plans.

How Do You Calculate Net ARR in Drift

Drift itself isn’t naturally geared towards letting you calculate complex metrics like Net ARR. As an alternative, teams typically use products like Arithmix to import data from Drift 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 Drift, combine it with data from other systems, and create calculations like Net ARR.

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 ARR in Arithmix

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

Arithmix is designed to give you the power to build any calculations you want on top of your Drift 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.