Revenue Growth Calculator
Growth split into new, expansion, contraction and churn, with the quick ratio, both retention figures, and annualising that compounds rather than multiplies.
Starting revenue, the month $184,000.00
new business +$14,200.00
expansion +$5,600.00
contraction -$2,100.00
churn -$7,900.00
Ending revenue $193,800.00
Net growth, the month 5.33%
annualised, compounded 86.4%
not 63.9%, which is the rate multiplied by 12
Where it came from
added $19,800.00, 10.8% of the base
lost $10,000.00, 5.4% of the base
net $9,800.00
Quick ratio 1.98
what it is revenue added for every unit lost
reading between 1 and 2: the bucket is nearly as leaky as the tap
Retention
gross revenue retention 94.6%, which cannot exceed 100%
net revenue retention 97.6%, which can
reading below 100 percent: expansion does not cover the losses, so every unit of growth has to be bought
If this repeats
after 3 months $214,993.67
after 6 months $251,208.03
after 12 months $342,964.54
Net growth is 5.33%, made of $19,800.00 added against $10,000.00 lost.
The rate alone would have said nothing about that split, and the split
is what decides whether the growth is affordable.
Annualised, that is 86.4% rather than 63.9%. Growth compounds, so
multiplying a monthly rate by 12 understates it, and the error grows
with the rate.
The quick ratio is 1.98: $19,800.00 added for every $10,000.00 lost.
Four or better is the figure usually quoted for efficient growth; near
one, the business is running to stand still and the fix is retention
rather than more sales.
Net revenue retention above 100 percent is the number investors look
for, because it means the base grows without any new customers. It also
hides churn: a few large expansions can cover a lot of small departures,
so read the gross figure next to it.
Growth from a small base is not evidence of much. Going from two
customers to three is 50 percent growth and is mostly noise; the same
rate from two hundred is a signal. Ask for the absolute numbers before
reacting to a percentage.
Contraction and churn are different problems. A customer who downgrades
still values the product and is telling you which parts; one who leaves
has decided. Reporting them as one number loses the distinction that
tells you what to fix.
Revenue growth is not the same as customer growth, and the gap is the
story: growing revenue with falling customer numbers means you are
selling more to fewer people, which works until the concentration bites.
The projection assumes the rate repeats, which it will not. It is there
to show what compounding does, not to forecast, and a rate extrapolated
for a year from one good month is the standard way a plan comes apart.
Output is valid and updates as you type.
Fix the highlighted fields to update the output.
Five percent growth in a month is not one number, it is four. New business, expansion from existing customers, contraction from downgrades, and churn. Ten percent net growth made entirely of new business is a different company from ten percent made of thirty percent new against twenty percent lost, and the second is paying three times as much to end up in nearly the same place.
The ratio between the two halves is the quick ratio: revenue added for every unit lost. Four or better is the figure usually called efficient growth. Near one, the bucket leaks as fast as the tap fills it.
And 5.33 percent a month is 86 percent a year, not 64. Growth compounds, so multiplying by twelve understates it.
How to use
- Put in the revenue at the start of the period.
- Split the change into new, expansion, contraction and churn. Enter all four as positive numbers.
- Read the quick ratio and both retention figures together.
Example
Starting revenue, the month $184,000.00
new business +$14,200.00
expansion +$5,600.00
contraction -$2,100.00
churn -$7,900.00
Ending revenue $193,800.00
Net growth, the month 5.33%
annualised, compounded 86.4%
not 63.9%, which is the rate multiplied by 12
Quick ratio 1.98
reading between 1 and 2: the bucket is nearly as leaky as the tap
Retention
gross revenue retention 94.6%, which cannot exceed 100%
net revenue retention 97.6%, which can
reading below 100 percent: expansion does not cover the lossesNet retention below 100 percent means every unit of growth has to be bought. Above it, the base grows on its own.
Pitfalls
Do not multiply a monthly rate by twelve. Compounding means 5 percent a month is 79.6 percent a year, not 60. Dividing an annual rate by twelve makes the opposite error.
Gross retention cannot exceed 100 percent; net retention can. Gross counts only losses, so it has a ceiling. Net adds expansion, which is why a business with heavy expansion can show net retention of 120 percent while losing a quarter of its customers.
Which is why you read them together. A high net figure hides churn when a few large expansions cover a lot of small departures, and that concentration is itself a risk.
Contraction and churn are different problems. A customer who downgrades still values the product and is telling you which parts. One who leaves has decided. Reporting them as one number loses the distinction that tells you what to fix.
No churn at all is a data problem, not a triumph. A period with zero churn usually means the churn has not been recorded yet, or cancellations are processed at period end and land in the next one.
Growth from a small base is mostly noise. Two customers to three is 50 percent. The same rate from two hundred is a signal. Ask for the absolute numbers before reacting to a percentage.
Revenue growth is not customer growth. Growing revenue with falling customer numbers means selling more to fewer people, which works until the concentration bites.
Compatibility
Arithmetic in the browser: nothing is uploaded and nothing is stored.
The decomposition is new plus expansion less contraction less churn, and the tests assert it reconciles to the ending revenue exactly. The quick ratio is added over lost, reported as “nothing was lost” rather than infinity when both loss figures are zero.
Annualising raises (1 + rate) to the number of periods in a year, so a monthly figure compounds twelve
times and a quarterly one four. The figure that multiplication would have given is printed next to it,
because that is the mistake this exists to prevent.
Net revenue retention is starting less losses plus expansion, over starting. Gross is starting less losses over starting. Both are on revenue rather than customer counts, which is the version that matters financially and is not the same as logo retention.