Metrics · Monetization · Finance · Quarterly · ratio

Expansion-to-Contraction Ratio

The ratio of expansion MRR to contraction MRR within a period, showing whether existing accounts are net growing or shrinking.

Formula

Expansion MRR / Contraction MRR

Divide total expansion MRR by total contraction MRR generated by the existing customer base within the same period.

A ratio consistently above 1 indicates the existing base is healthily growing revenue, a precondition for achieving negative net churn.

A company generating $20,000 in expansion against $8,000 in contraction reports a 2.5:1 expansion-to-contraction ratio.

Expansion-to-Contraction Ratio — Growth metric · Cofounderbase