ARR Growth % is the period-over-period percentage increase in a SaaS company's ARR. ARR is the amount of revenue a company expects to receive each year from its customers.
ARR Growth % is a critical metric for SaaS companies, because it indicates the company's overall health and performance. It shows how fast the company is growing, and it can be used to compare a company's performance to that of its competitors. A high ARR Growth % is usually a sign of a healthy company with a strong product and a growing customer base. It also indicates that the company is well-positioned to continue growing in the future.
Investors and stakeholders in SaaS companies often use ARR Growth % to assess the company's value and potential for future growth. It's a key metric that venture capitalists, private equity firms, and other investors consider when deciding whether to invest in a company. A high ARR Growth % can help a company secure funding and increase its valuation.
ARR Growth % is calculated using the following formula:
ARR Growth % = (Current ARR - Previous ARR) / Previous ARR x 100
For example, let's say a SaaS company had an ARR of $10 million in the previous year, and in the current year, it has an ARR of $15 million. To calculate the ARR Growth %, we would use the following formula:
ARR Growth % = ($15MM - $10MM) / $10MM x 100 = 50%
So in this example, the ARR Growth % would be 50%.