Revenue expansion refers to the increase in revenue from existing customers through mechanisms such as upselling, cross-selling, and improving customer retention. It directly influences ARR, as higher revenue expansion leads to an increase in the annual recurring revenue. Businesses aim to maximize revenue expansion to enhance their ARR and overall profitability.

Customer Lifetime Value (CLV) is the total revenue a business can expect from a customer over the entire duration of their relationship. CLV is closely related to ARR, as a higher CLV often translates to a higher ARR. By focusing on strategies that increase CLV, such as improving product value and customer satisfaction, companies can positively impact their ARR.

Churn rate is the percentage of customers who cancel their subscriptions within a given period. A high churn rate negatively affects ARR because it reduces the number of active, paying customers. Companies work to minimize churn by enhancing customer experience and providing value, thus maintaining or increasing their ARR.

Monthly Recurring Revenue (MRR) is the total revenue generated from subscriptions on a monthly basis. MRR is a building block for ARR, as ARR is essentially MRR multiplied by 12. Monitoring MRR helps businesses track short-term financial performance and make adjustments to achieve their long-term ARR goals.

Average Revenue Per User (ARPU) is the average revenue generated per user or customer. An increase in ARPU contributes to a higher ARR, as more revenue is collected from each customer. Companies focus on strategies such as upselling and cross-selling to boost ARPU and, consequently, ARR.