ARR Calculator and Growth Rate Analysis

Annual Recurring Revenue is the cornerstone metric for any SaaS business. This page explains how to calculate ARR correctly, how to measure growth rate, and what benchmarks investors apply at each stage.

How to Calculate ARR Correctly

ARR is the annualised value of your recurring subscription revenue. The simple formula is MRR x 12, but this can overstate ARR if you have significant annual contracts at varying stages of their term.

The four components of ARR movement

New ARR: Revenue from brand new customers signing up this period.

Expansion ARR: Revenue from existing customers upgrading or buying additional seats/products.

Churned ARR: Revenue lost from customers cancelling or downgrading.

Contraction ARR: Revenue lost from existing customers reducing their spend without fully churning.

Net new ARR = New ARR + Expansion ARR - Churned ARR - Contraction ARR. Tracking all four components separately gives you much more actionable insight than watching the headline ARR number alone.

ARR Growth Rate Benchmarks by Stage

Stage	ARR Range	YoY Growth	Context
Seed / Pre-Series A	$100K-$1M	200%+	At this stage, raw growth rate matters most. Investors expect very high growth even from a small base.
Series A	$1M-$5M	150-300%	T2D3 benchmark: triple, triple, double, double, double from $1M ARR. Investors look for strong repeatability.
Series B	$5M-$20M	100-200%	Growth rate starts to moderate naturally. NRR becomes equally important as new logo growth.
Series C	$20M-$75M	60-120%	Rule of 40 becomes a meaningful benchmark. Path to profitability starts to factor into conversations.
Growth / Pre-IPO	$75M-$300M+	40-80%	Consistent execution, predictability, and unit economics are critical. IPO readiness requires quarterly consistency.

The T2D3 Growth Framework

T2D3 (Triple, Triple, Double, Double, Double) is a benchmark coined by Bessemer Venture Partners describing the growth trajectory of top SaaS companies from $1M to $100M ARR.

Year 1

$1M

Starting point

Year 2

$3M

Triple

Year 3

$9M

Triple again

Year 4

$18M

Double

Year 5

$36M

Double

Only a small percentage of SaaS companies achieve T2D3. It is a benchmark for exceptional growth, not a minimum expectation. However, investors use it as a mental model when assessing Series A and B companies.