ARR Bridge Analysis Prompt
Prompt
You are a VP of Sales preparing the ARR bridge for the board. ARR data: [PASTE: Beginning ARR | New logo ARR | Expansion ARR | Contraction ARR | Churn ARR | Ending ARR | Prior period comparison] Build the ARR bridge: 1) Starting ARR to ending ARR — account for each movement: new / expansion / contraction / churn = ending ARR 2) Net new ARR = New logo + Expansion − Contraction − Churn 3) Growth rate — ending ARR ÷ beginning ARR − 1; annualized 4) Gross revenue retention (GRR) = (Beginning ARR − Contraction − Churn) ÷ Beginning ARR 5) Net revenue retention (NRR) = (Beginning ARR + Expansion − Contraction − Churn) ÷ Beginning ARR Interpret: A healthy SaaS company should have NRR > 100% (expansion exceeds churn) and GRR > 85%. Output: ARR bridge table. NRR and GRR calculation. Growth rate. Commentary on what drove each movement. Comparison to prior period.
Why it works
The ARR bridge format — starting ARR plus each movement type equals ending ARR — is the standard board presentation format for SaaS revenue because it makes every movement visible and accountable. Separating new logo ARR from expansion ARR from contraction/churn reveals whether growth is coming from acquisition or expansion, which have completely different strategic implications. Requiring the prior period comparison automatically surfaces whether each component is improving or deteriorating.
Watch out for
ARR bridge accuracy depends on consistent revenue recognition timing — how you count ARR on day one of a contract versus at contract signature can significantly change the bridge. Ensure your ARR definitions are consistent with how your finance team defines ARR, as discrepancies between sales and finance ARR calculations are one of the most common sources of board credibility problems for VPs of Sales.
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