Here's how MongoDB (NASDAQ:
MDB) defines Annualized Recurring Revenue (ARR)
:
"We
define ARR as the subscription revenue we would contractually expect to
receive from customers over the following 12 months assuming no
increases or reductions in their subscriptions."
Number of $100,000 ARR Customers each year:
- 2016: 164
- 2017: 246
- 2018: 354
- 2019: 557
- 2020: 751
- 2021: 975
42.8% Compound Annual Growth Rate in $100K or greater ARR customers.
The company also closely monitors ARR expansion rate and here's is what they have to say how that:
"We
also examine the rate at which our customers increase their spend with
us, which we call net ARR expansion rate. We calculate net ARR expansion
rate by dividing the ARR at the close of a given period (the
“measurement period”), from customers who were also customers at the
close of the same period in the prior year (the “base period”), by the
ARR from all customers at the close of the base period, including those
who churned or reduced their subscriptions. For Direct Sales Customers
included in the base period, measurement period or both such periods
that were self-serve customers in any such period, we also include
annualized MRR from those customers in the calculation of the net ARR
expansion rate. Our net ARR expansion rate has consistently been over
120%."
The ARR expansion rate is another critical metric for software subscription companies. It shows whether the customer is willing to buy more of the product and/or expand its use within the company.
Sources:
