Description
Annual Recurring Revenue that is earned for a new customer (i.e. a customer account that is newly opened with the company) is classified as New ARR.
Example
Suppose, Vareto enters into a 3-year, $15M contract with a new customer that it hasn’t yet worked with. Therefore, New ARR is $5M.
Why it matters
New ARR is an important metric as it highlights how efficiently and easily a company is able to attract new customers every year.