This is from the Alteryx conference call (slightly paraphrased for clarity):
We initiated our land and expand model in the first quarter of 2014. $1 of revenue in the first cohort year expanded to $1.70 in the second year, $2.70 in the third year, to just under $4.00 in the fourth year. The subsequent cohorts of 2015 and 2016 have performed at similar levels.
That gives me a clearer picture of how a 31% net retention rate works. The first year after landing the cohort spend grows at 70%, the second year at 59%, and the third year at 47%.
So why is it just a 31% retention rate? Because, as you see, the percent growth for the cohort decreases each year, even though the actual increases in dollars spent actually increased each year (70 cents, $1.00, $1.30 in their example), because it’s no longer off such a small base. And they have many previous cohorts from past years, whose total spend is now even larger, but which are now growing at smaller percentages, so it makes sense that for the whole population of past cohorts the growth is just 31%. Interesting!
Saul
For Knowledgebase for this board,
please go to Post #17774, 17775 and 17776.
We had to post it in three parts this time.
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that is on the right side of every page on this board