ARR Waterfall

Why you should use the ARR Waterfall template

Accurate tracking of Annualized Recurring Revenue (ARR) is critical for subscription-based businesses. But manual calculations, siloed data sources and complex business logic often lead to errors. The ARR Waterfall Template is designed to streamline the process of calculating and reporting ARR, providing a low-friction, high-accuracy experience that delivers precise insights.

Who is this template for

The ARR Waterfall template is an essential analytics tool for:

• Business leaders who needs to reliably and efficiently track ARR and communicate this critical metric to investors.
• RevOps VPs or Directors responsible for creating predictable revenue.
• Business Analysts tasked with monitoring and investigating ARR changes.
• FP&As interested in automating ARR calculation and improving visualization .
• Sales, Marketing, Business Development Representative (BDR), and Customer Support teams seeking to analyze and visualize their impact on ARR.

Key Benefits

This template provides the following key benefits to subscription-based companies:

1. Unparalleled Accuracy: Automatically calculate accurate point-in-time ARR based on your unique business logic.
2. Clear Visualization: Ease decision-making with clear ARR visualizations, tailored to your strategic needs.
3. Scalability: Stay ahead as your business scales with revenue analytics that grows with you.
4. Data Integration: Ensure continuity and depth in your analysis with a flexible data model that seamlessly integrates diverse data source; ideal for CRM transitions.

How does this template work

The ARR Waterfall Template leverages the central ARR Waterfall metric to visualize the development of ARR within each time-period, breaking it down into Starting, New, Expansion, Contraction and Churn ARR. This metric along with Net New ARR can help RevOps, FP&As and business leaders alike with reporting and analysis of:

• The amount of ARR acquired over time and top sources
• Segments that expand / contract / churn more
• Historical data on how ARR of different account cohorts has changed over time
• In-period views of how ARR has developed in the current month, quarter, year for timely decision-making

Frequently Asked Questions

How will I know my ARR is accurate?

To ensure metrics are accurately calculating ARR, you’ll be guided through defining your revenue logic and mapping your data in Sightfull. Initially, you may compare specific customer or time-period amounts to other data sources to validate these metrics and refine your data modeling as needed.

How are ARR changes in each time-period calculated?

The ARR Waterfall template automatically calculates changes using out-of-the-box metrics. These metrics compare the ARR sum of customer contracts in each time-period with the previous one. In this way, for example, Expansion ARR is calculated as the sum positive change in existing customer account period-over-period.

Can I track the ARR of specific customer accounts?

Yes. All Sightfull metrics can present results at the individual entity level. In the ARR Waterfall metrics, ARR changes and sum total can be displayed for individual customers at any point in time.

What if I have a “grace period” for customer renewals?

Sightfull supports configuration of a “grace period” to ensure Churned ARR is recognized according to each company’s business logic. See our documentation on “Configuring Grace Period” to learn more.