Gross New ARR

Total new recurring revenue generated

Gross new ARR is the annual recurring revenue added from new customers and expansion, before subtracting churn and contraction. It measures the total output of the growth engine, how much new recurring revenue the company generated through new sales and expansion, without netting out the revenue lost to churn and shrinkage. This makes it a measure of gross generation, distinct from net growth, and reading it alongside net new ARR reveals whether the company's growth story is about how much it generates or how much it loses.

Gross versus net new ARR

The distinction between gross and net is where the insight lives:

- Gross new ARR: total ARR added from new customers and expansion, before losses. - Net new ARR: gross new ARR minus churned and contraction ARR, the actual net change.

Gross new ARR measures the engine's output; net new ARR measures how much of that output survived churn to become real growth. The two together tell a fuller story than either alone, because they separate two distinct questions: how much new recurring revenue is the company generating, and how much of it is it keeping.

Why the gap matters

The most valuable insight from tracking both is the gap between them. A large gap between gross new ARR and net new ARR means churn and contraction are eating a big share of what the engine produces, so the company generates a lot of new recurring revenue but keeps little of it as net growth. This is a churn problem, and it is invisible if you look only at net new ARR, which shows a small net number without revealing whether the cause is weak generation or heavy losses. A company with strong gross new ARR but weak net new ARR is generating plenty but leaking it away, which points to retention as the fix; a company with weak gross new ARR has a generation problem, which points to sales and expansion. Distinguishing these is crucial, because the two problems have completely different solutions, and the net number alone conflates them. This is why sophisticated recurring-revenue analysis looks at the full ARR bridge, gross new ARR from new and expansion, minus churned and contraction ARR, equals net new ARR, rather than just the net figure. Gross new ARR measures how hard the growth engine is working; the gap to net new ARR measures how much of that work churn is undoing. A company that tracks both can see whether to invest in generating more or retaining more, which is a far more actionable diagnosis than a single net number that hides which of the two is actually the constraint on growth.