What it is
An ARR waterfall is the bridge from beginning ARR to ending ARR. It decomposes growth into new logos, expansion, contraction, churn, and other movements so the board sees composition, not just a net number.
How it’s calculated
Beginning ARR + new + expansion − contraction − churn ± other = ending ARR. Every component must reconcile to the same customer schedule used for ending ARR, NRR, and GRR.
Where it breaks
Waterfalls break when components are taken from CRM while ending ARR comes from billing — or when “other” becomes a dump for unexplained variance. If GRR and NRR cannot be reproduced from the same movements, the bridge is not finished.
In the board pack
The waterfall is the spine of SaaS board ARR reporting. Read it next to NRR, GRR, and the ARR vs GAAP bridge.
Keep the written definition stable across close, the board pack, and diligence so the same word never means two math models.