Revenue Metrics

ARR Bridge

A waterfall analysis showing how ARR moved from one period to another, decomposed into constituent growth and loss components.

An ARR bridge visualises the path from starting ARR to ending ARR by breaking the movement into its component parts: new ARR from new customers, expansion ARR from upsells and seat additions, contraction ARR from downgrades, and churned ARR from cancellations. Reactivation ARR from returning customers is sometimes included as a fifth component. The bridge makes transparent what aggregate ARR numbers obscure — a company can show flat ARR while simultaneously losing significant revenue from churn and replacing it with new business, a completely different health profile than stable ARR with no churn. ARR bridges are standard in board presentations and investor updates. They are also essential for planning: each component has a different lever to pull, and understanding their relative magnitudes drives prioritisation of growth versus retention investments.