Simple ARR Forecast (Revenue/Churn)

This simple ARR forecast template is ideal for when you want to forecast your revenue based on the health of your customers. We designed it for companies with a subscription service revenue model.

To calculate your ARR forecast, this model uses a list of your existing customers, the current annual subscription amount, the customer terms and overall customer health. In turn, the template provides you with a simple recurring revenue projection.

This new recurring revenue projection then becomes your new top-line forecast, which means you'll have a strong idea of where the business is headed.

We designed this model to calculate each account's chance of expansion, contraction and churn. Color-coded flags (green, yellow or red) give you quick and easy at-a-glance information.

A few more details:

• The account health drivers table calculates the weighted average of the different health ratings (i.e., 68 of 80 accounts are green, so green health has an 85% weighting).
• We input assumptions for churn, expansion, and contraction (sheet: data, column I).
• The starting MRR value on the data tab includes new sales as part of its calculation (i.e., new sales revenue are including in starting MRR the month after their term starts).
• The starting MRR value on the data tab includes churn as part of its calculation (i.e., new sales revenue are including in starting MRR the month after their term starts).

The end result is a projection of recurring revenue of your subscription business that can then be used to drive sales to a forecast that is based on clear metrics.

One of the best ways you can capitalize on opportunity and mitigate risk is to practice proactive future vision. Consistently looking at what you expect to happen and making the appropriate adjustments will keep you on track to meet—or surpass—your goals.

Utilize these best practices into your FP&A strategy to help ensure accurate predictions, informed decision-making, and long-term business growth.

• Segmentation for Precision: Break down your customer base for tailored, accurate forecasts.
• Utilize Historical Data Wisely: Leverage meaningful insights from historical data while filtering out noise.
• Regularly Update Assumptions: Keep assumptions current to align with dynamic market conditions.
• Collaborative Input: Involve key stakeholders for holistic insights and improved accuracy.
• Scenario Analysis: Plan for uncertainty by incorporating multiple scenarios into your forecasting process.
• Cross-Functional Alignment: Foster alignment between finance and other departments for shared goals and accurate forecasting.

• Track and control revenue churn to keep your best customers
• MRR vs. ARR: recurring revenue in SaaS is still important
• LTV/CAC ratio: your secret weapon to measure sales & marketing ROI