Growth is judged against scale
A good net new ARR growth rate is not a single number, because percentage growth naturally decelerates as the revenue base grows. Net new ARR is the recurring revenue added in a period after subtracting churn and contraction. Whether a given rate is strong depends entirely on where the company sits. Early-stage companies are expected to grow triple digits; at scale, growth in the 30s can be elite. Reading the rate without scale context produces the wrong verdict every time.The same performance, different percentages
| ARR scale | Strong growth looks like |
|---|---|
| A few million | More than doubling year over year |
| Tens of millions | Roughly 60 to 100% |
| Around one hundred million | Roughly 30 to 50% |
Retention sets the ceiling
Net new ARR is bookings and expansion minus churn and contraction, so retention quietly governs how much of your gross sales become net growth. A company with strong net revenue retention converts more of its new business into net additions, because expansion offsets the losses instead of the sales team having to refill a leaking base. Weak retention means selling hard just to stay flat. This is why net new ARR growth and retention are read together, and why both feed the Rule of 40 as the balance of growth and efficiency.
Frequently Asked Questions
What is a good ARR growth rate?
It depends on scale. A company at a few million in ARR is often expected to more than double year over year, while a company at a hundred million growing 30 to 40% can be best-in-class. Percentage growth naturally slows as the base grows, so a good rate is always judged relative to size, not as a single number.
Why does ARR growth rate slow as a company scales?
Because the base gets larger. Adding ten million in ARR is triple-digit growth on a five million base and single-digit growth on a two hundred million base. The same absolute performance produces a very different percentage, which is why growth rate must be read alongside absolute net new ARR at scale.
How does retention affect net new ARR growth?
Net new ARR is new and expansion revenue minus churn and contraction. Strong net revenue retention means expansion offsets losses, so more of the new bookings translate into net growth. Weak retention forces the company to sell more just to stay level, which caps the growth rate no matter how good new sales are.
Put these metrics to work
ORM builds custom revenue forecast models that turn concepts like what is a good net new arr growth rate? into prescriptive action for your team.
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