Gross Dollar Retention Rate (LTM)

The share of ARR retained from retained accounts (accounts that were active 12 months before the period) accounting for Contraction and Churn.

What is Gross Dollar Retention Rate (LTM)?

Gross Dollar Retention Rate (GDR), also known as Gross Revenue Retention Rate or Customer Dollar Retention Rate, is a vital financial metric that measures the share of the current Annual Recurring Revenue (ARR) retained from existing customers who were active 12 months prior, while excluding expansion revenue. It takes into account Contraction, Churn, and Expansion of revenue during the last 12 months.

Why is it Important to Measure Gross Dollar Retention Rate (LTM)?

Gross Dollar Retention Rate (LTM) is a critical financial metric, focusing specifically on the Last 12 Months. It offers essential insights into the financial health, growth, and long-term resilience of a business during this specific period. Here's why it's important:

LTM Focus: GDR (LTM) analyzes the ability to retain revenue from customers who were active 12 months ago, excluding expansion revenue. This provides a snapshot of recent customer retention efforts.
Financial Health: It measures how effectively the company retained revenue from existing customers during the last 12 months, reflecting financial stability.
Recent Performance: GDR (LTM) offers insights into the company's performance in retaining revenue over a short-term period, helping assess recent customer satisfaction and loyalty.
Churn and Contraction: By excluding expansion revenue, GDR (LTM) highlights the company's ability to prevent revenue loss due to Churn and Contraction.

How is Gross Dollar Retention Rate (LTM) Calculated?

Gross Dollar Retention Rate (LTM) is calculated as a percentage of the starting ARR from customers who were active 12 months ago, accounting for changes in revenue due to Churn and Contraction during the last 12 months.

Formula

Gross Dollar Retention Rate (LTM) =Starting ARR (12 months ago) - Churn - ContractionStarting ARR (12 months ago) This formula provides insights into how effectively the company managed to retain its existing customer base's revenue while excluding expansion revenue over the last 12 months.