How To Calculate Net ARR in PeopleSoft | Arithmix

Calculating Net ARR in PeopleSoft can be a bit tricky, but it is an essential step in determining the overall financial health of your organization. Net ARR, or Net Annual Recurring Revenue, is a metric that measures the amount of recurring revenue your company generates each year after accounting for any discounts, refunds, or cancellations.

To calculate Net ARR, you need to first determine your Gross ARR, or Gross Annual Recurring Revenue. This is the total amount of revenue your company generates each year from recurring sources, such as subscriptions, maintenance fees, or service contracts. Once you have your Gross ARR, you can subtract any discounts, refunds, or cancellations to arrive at your Net ARR.

For example, let's say your company generates $1 million in Gross ARR each year from subscriptions. However, you offer a 10% discount to customers who pay annually instead of monthly, resulting in $100,000 in discounts. You also have $50,000 in refunds and $25,000 in cancellations. To calculate your Net ARR, you would subtract the discounts, refunds, and cancellations from your Gross ARR, resulting in a Net ARR of $825,000.

What Is Net ARR?

Net ARR is a critical metric for any company that generates recurring revenue. It provides a clear picture of the amount of revenue your company can expect to generate each year from your existing customer base, after accounting for any changes or fluctuations in revenue due to discounts, refunds, or cancellations.

By tracking your Net ARR over time, you can identify trends and patterns in your revenue streams, and make informed decisions about pricing, promotions, and customer retention strategies. It also helps you to forecast future revenue and plan for growth, by providing a reliable baseline for your recurring revenue streams.

When Is It Valuable To Calculate Net ARR?

Calculating Net ARR is valuable for any company that generates recurring revenue, regardless of size or industry. It is particularly useful for subscription-based businesses, software-as-a-service (SaaS) companies, and other organizations that rely on recurring revenue streams to drive growth and profitability.

It is also valuable for companies that are looking to expand their customer base or introduce new products or services. By understanding your Net ARR, you can identify areas of opportunity for growth and make informed decisions about pricing, promotions, and customer acquisition strategies.

In conclusion, calculating Net ARR is an essential step in understanding the financial health of your organization. By tracking your Net ARR over time, you can identify trends and patterns in your revenue streams, and make informed decisions about pricing, promotions, and customer retention strategies. It is a valuable metric for any company that generates recurring revenue, and can help you to plan for growth and achieve long-term success.

How Do You Calculate Net ARR in PeopleSoft

PeopleSoft 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 PeopleSoft 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 PeopleSoft, 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 PeopleSoft 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 PeopleSoft 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.