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Hello Reg,

Churn is a specific measure used by investors in subscription
model businesses.
It is a useful metric used to analyze businesses ranging from Health clubs/Gyms to Mobile phone operators.

Net churn is the most commonly used approach

in the software subscription space net churn is most commonly measured by the delta in the number of seats from existing customers . Some existing customers will reduce the number of seats, some will increase the number of seats . The net
number (only from existing customers) is the churn. If the net number is an attrition (typical for more mature customer base) the software company is looking for new customers to replace a declining existing customer base. If the net number is growing , it is called negative churn. The business is growing itself without having to find a single new customer. Obviously it would be a daft business strategy to rely on negative churn but churn management is an important skill in the subscription model. We once invested in a health club chain backing a new CEO who was passionate about the customer experience . He focused on his existing member base in a way that his predecessor (who just focused on new store openings) had not. New membership growth declined by 3% as he realigned staff incentives but churn fell from 30% to 18% and the stock more than doubled. It was a salutary reminder of the old adage to hug your existing customer.
I really like looking at net churn in software because it is the bright line measure of product relevance and customer satisfaction. If existing customers are net adding seats then this is not just salesmanship.

It is is quite hard to determine precise churn at LVT because ARR and revenue is also affected by ARPU , each seat providing more revenue as a customer takes more bundled serivices but we don’t have to be too precise, if you look at number of customers and revenues it sure looks like negative churn is helping the growth.

Im not suggesting this is a critical factor at such an early stage in growth but it’s a data point that helps us think about the product quality and economic moat