Definitions

Churn

• Theoretical Description: Churn refers to the rate at which customers stop doing business with a company over a given period. It is often expressed as a percentage of total customers lost.

• Churned’s Standard Interpretation: We define churn as a customer who has stopped engaging with the product/service for a period long enough to be considered inactive. The exact definition varies based on the business model (e.g., subscription cancellations for SaaS, no purchase for X months in e-commerce, or no engagement for Y days in media).

• Enrichment:

  • Users are considered churned if they have canceled all active subscriptions and do not have a new contract starting within the next 7 days after their latest contract has ended.

  • End_date has been added to the subscription, and it is in the past.

• Alternative Interpretations:

  • Revenue churn: Measures the percentage of revenue lost due to downgrades or cancellations.

  • Logo churn: Counts the number of distinct customers lost.

  • Voluntary vs. involuntary churn: Differentiates between customers who cancel intentionally and those lost due to failed payments.

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MRR (Monthly Recurring Revenue)

• Theoretical Description: MRR represents the predictable revenue generated from active subscriptions on a monthly basis. It is a key metric for SaaS and subscription-based businesses.

• Churned’s Standard Interpretation: We calculate MRR as the sum of all active subscription revenues normalized to a monthly basis, including expansions, contractions, and downgrades. One-time charges and usage-based fees are not included.

• Alternative Interpretations:

  • Gross MRR: Includes all revenue, regardless of churn or downgrades.

  • Net MRR: Adjusts for expansion, contraction, and churn to reflect overall revenue stability.

  • Contracted MRR: Only includes revenue from fixed contracts, excluding usage-based billing.

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ARR (Annual Recurring Revenue)

• Theoretical Description: ARR is the total expected recurring revenue for a full year, calculated based on active subscriptions.

• Churned’s Standard Interpretation: ARR is calculated as MRR × 12, considering only recurring revenue. It excludes one-time charges and short-term promotions.

• Enrichment:

  • Expected ARR is calculated by summing the term_payment_allow_renew_days for all currently Active Customers.

• Alternative Interpretations:

  • Committed ARR: Only considers revenue from contracts signed for a minimum of 12 months.

  • Run-rate ARR: Annualizes the latest MRR without considering future expansions or contractions.

  • Logo ARR: Measures ARR from individual customers rather than total revenue.

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Amount of Active Customers

• Theoretical Description: The total number of customers currently using a product or service. The definition of "active" can vary by business model.

• Churned’s Standard Interpretation: We count active customers based on sustained engagement, such as:

  • SaaS: Customers with an active paid subscription.

  • Media: Users consuming content within a defined period.

  • E-commerce: Customers who have made a purchase in a set timeframe.

  • Charities: Donors who contributed in the past year.

• Enrichment:

  • A user is considered Active if they have at least one active subscription where:

    • Start_date is in the past

    • End_date is in the future or does not exist

• Alternative Interpretations:

  • Billing-based activity: Only counts customers who have been billed recently.

  • Engagement-based activity: Includes customers who interacted with the product but may not be paying.

  • Rolling activity window: Defines "active" based on engagement within X days instead of a static definition.

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New Customers

• Theoretical Description: New customers refer to first-time buyers or subscribers within a given period. The definition can vary based on how a company tracks acquisitions.

• Churned’s Standard Interpretation: We define a new customer as an individual or business that has made their first transaction, activated their account, or subscribed to a service for the first time. The tracking period is aligned with reporting cycles (e.g., monthly, quarterly).

• Enrichment:

  • Users are considered New Customers if they have subscriptions where Start_date falls within a specific month.

  • No filtering is applied to exclude test accounts or other internal records.

• Alternative Interpretations:

  • First-time revenue customers: Only counts customers generating revenue for the first time.

  • Trial-to-paid conversion: Includes free trial users who convert into paying customers.

  • New logo acquisition: Focuses on acquiring new companies rather than individual users.

  • Reactivated customers: Some businesses count returning customers as "new" if they were inactive for a long period before repurchasing.