Answers the question if the company had more Upsell Transactions than Churn/Downsell Transactions.

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Example: Company XYZ's "+/-" Transactions in April 2023 was 2.

(Upsell Transactions of 4 - [Downsell Transactions of 1 + Churn Logos of 1])

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The number of unique customers that have an active subscription (or had a transaction) at a specific point in time, or over a time period.

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Example: Company XYZ had 125  unique customers in February 2023, and therefore had 125 Active Logos in that month.

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Average profit (or revenue) per customer over the entirety of the company relationship post-sale.

Example: Company XYZ has a customer that has been with them for 5 years, and pay $100 each year. This customer would pay $500 in total.

To look at the margin, subtract the COGS from the total amount the customer paid. It costs Company XYZ $5 a year to support this customer, so $25 over the course of 5 years. $500 - $25 = $475 Actual CLV.

Average profit (or revenue) per customer over the entirety of the company relationship post-sale.

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Example: If Total New Logo ARR is $500,000 in January and the company signed 10 new customers, the Average New Logo is $50,000 in that month.

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The average additional ARR for each upsell transaction.

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Example: If total upsell revenue in a given month is $20,000 across 100 upsell transactions, the Average Upsell is $200 that month.

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The difference between money coming into the company from customers compared to the money being spent to run the business.

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Example: Company XYZ received $500k in total from customers in cash flow in April 2023.  They spent as a company $600k in April.  They have a Cash Burn of $100k in April.

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Churn ARR is the annualized value of the recurring portion of contracts for customers that went to $0 in Run Rate ARR (i.e are no longer customers).

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Example: Company XYZ lost 3 customers that each had a contract that was $100k in ARR (Run Rate ARR) in Q2 2023.  They therefore had $300k in Churn ARR in Q2 2023.

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The number of unique customers that cancelled their subscription (or did not transact) at a specific point in time, or over a time period. Churned Logos are no longer active customers.

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Example: Company 123 lost 4 customers in July 2023, and therefore had 4 Churned Logos for the month.

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Money spent on things needed to support the customers after they sign up. This is the total of all costs related to creating and delivering a product or service to your customers.

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Example: Hosting expenses ($25,000) + Engineering Salaries ($17,000) + Customer Success (18,500) = $60,500 COGS for Q2 2023.

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Answers the question how many dollars in Sales and Marketing do you need to spend to acquire 1 customer. (Sales and Marketing Expenses/Number of Customers) - Time Constraint

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Example: Company ABC spends $10,000 in January and acquired 5 customers, their CAC in January would be $2,000.

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Downsell ARR is the difference in what an existing customer was paying (initial contract value) compared to what they pay now (current contract value), for customers that pay less now.

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Example: Customer B had an ARR of $55k and decided to renew their subscription at $47k.  Therefore they contributed $8k in Downsell ARR

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The number of transactions in which a logo decreased their ARR (or spent less in a given month than the prior month).

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Example: Company XYZ had 2 customer transactions that decreased their contract value in April 2023, and therefore for that month had 2 Downsell Transactions.

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Average expected profit (or revenue) per customer over the expected length of the relationship post sale.  This uses the Expected Gross Logo Retention, Average Deal Size, CAC, and COGS.
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Compare the ARR from all customers you had 12 months ago to that same set of customers today. Expressed as a percentage, divide the ARR from those customers today by the ARR from 1 year ago, excluding upsell from any customer. This number will be between 0 and 100%.

Example: 1 Year ago (Q2 2022) Company XYZ had 100 total customers with $40M in Run Rate ARR. Today those same 100 customers have $50M in Run Rate ARR (Q2 2023). 10 of the customers had $10M in ARR in total and went to $0 in ARR. 20 of the customers went from $10M in ARR in total and went to $30M in ARR. The other 70 customers went from $20M in ARR and stayed at $20M in ARR. The Gross Retention for Q3 2023 would be $30M/$40M = 75% for Q2 2023.

Compare all customers you had 12 months ago to that same set of customers today.  What percentage are still an active customer?

Example:  Company XYZ's Gross Logo Retention in Q2 2023 was 90%.

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Relevant for marketplaces; This is the amount a customer spends in a marketplace in a given time period.

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Example: In July 2023, customers of Company XYZ spent $3.2M in their marketplace, therefore their GMV for July 2023 was $3.2M.

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The result of taking the Upsell ARR in a quarter and subtracting the Total Churn in that quarter

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Example: Company XYZ's In Quarter Upsell - Total Churn in Q2 2023 was $700k.

(In Quarter Upsell of $1.0M - Total Churn of $300k)

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For every $1 you spend in Sales and Marketing, how much will you get back in New Logo ARR.

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Example: Company XYZ spent $150,000 in Sales and Marketing in Q2 2023 and had $100,000 in New Logo ARR.  Their Magic Number (No Lag) would be 0.67.

Some companies utilize MRR which would be all the ARR numbers, but divided by 12.

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Example: Company XYZ's Run Rate MRR on 7/31/2023 was $250k.
($3.0M in ARR / 12 months)

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Compare the ARR from all customers you had 12 months ago to that same set of customers today. Expressed as a percentage, divide the ARR from those customers today by the ARR from 1 year ago.

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Example: 1 yr ago (Q2 2022) Company XYZ had 100 total customers with $40M in Run Rate ARR. Today those same 100 customers have $50M in Run Rate ARR (Q2 2023).  The Net Retention is 125% for Q2 2023.

New Logo ARR is the annualized value of the recurring portion of contracts from new customers who were not a customer before.  

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Example: In Q2 2023 Company XYZ added $2.0M in New Logo ARR.

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The number of unique new customers that signed up for a subscription (or made a transaction) at a specific point in time, or over a time period. New logos are new customers.

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Example: Company ABC signed 80 new customers in Q3 2023, and therefore had 80 New Logos in that quarter.

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Run Rate ARR is the annualized value of the recurring portion of all the contracts you have active on a given date.  Put simply, if you add no new customers, don't lose any customers, and don't upsell any customers this would be your revenue over the next year.

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Example: Company XYZ's Run Rate ARR on 7/31/2023 was $7.3M.

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The money spent on the Sales and Marketing department to acquire new customers through headcount, events, ads, commissions, etc.

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Example: LinkedIn Ads ($4,000) + Referral Program ($3,500) + Sales/Marketing Salaries ($14,500) + Events ($3,000) = $25,000 in Sales & Marketing expenses in Q1 2023.

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The percentage of the Gross Merchandise Value (GMV) that the company gets to keep.

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Example: Company XYZ received $320k from that GMV of $3.2M, so had a take rate of 10%.

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This is the sum of the Churn ARR and Downsell ARR for a given period.  

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Example: In Q2 2023 if Company XYZ had $300k in Churn ARR and $150k in Downsell ARR, the company would have $450k in Total Churn + Downsell ARR in Q2 2023.

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Total New Business ARR is the sum of New Logo ARR and Upsell ARR in a given period.  

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Example: Company XYZ added $2.0M in New Logo ARR and $1.0M in Upsell ARR and therefore added $3.0M in Total New Business ARR in Q2 2023.

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Upsell ARR is the annualized value of the recurring portion of contracts from existing customers above whatever their existing ARR currently is.

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Example: Customer A had a Run Rate ARR of $100k.  They added more users and now have a Run Rate ARR of $120k.  The $20k is Upsell ARR.  

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The number of transactions in which a logo increased their ARR (or spent more in a given month than the prior month).

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Example: Company XYZ had 4 customer transactions that increased their contract value in April 2023, and therefore had 4 Upsell Transactions in that month.

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