Across roughly 200 AI-native software companies above $250K in annualized revenue, median gross revenue retention measured 40 percent and median net revenue retention measured 48 percent during 2025. Median net revenue retention for the roughly 2,700 B2B software companies in the same dataset measured 82 percent. Kyle Poyar published the figures on 10 December 2025, working from a ChartMogul study of about 3,500 subscription companies categorized by an automated scrape.
Five months later, TechCrunch documented how that revenue base is counted before it is collected. Spellbook chief executive Scott Stevenson called the counting of uncollected contract value as ARR a dishonest metric and accused large funds of supporting it. TechCrunch interviewed more than a dozen founders, investors, and startup finance professionals, and reported one venture investor who had seen contracted ARR run 70 percent above collected ARR, a company marketing $50M in ARR against a collected figure of $42M, and a board that knew pilot-stage contract value was being counted as ARR during the pilot.
The gap comes from counting rules, and a buyer can examine those rules using contracts, billing records and matched receipts. Seven checks separate the current recurring service run rate, its collection history and a forward retention scenario.
Define the recurring revenue base before comparing ARR
ARR definitions vary. This screen starts with the annualized recurring value of services currently being delivered under active contracts. It then reviews collections separately. ARR is not itself a cash forecast or a guarantee of renewal.
Contracted ARR, sometimes labeled committed ARR, includes signed contracts whose delivery begins in a future period, so a contract signed in June with a January start date enters the ARR line in June and carries no revenue for six months. Pilot conversion value counts the post-pilot annual price of a pilot before the customer has decided to convert. Verbal commitments count revenue from customers who have stated an intent to renew without signing. Single-month annualization multiplies the most recent month by twelve, which imports any one-time fee, migration charge, or usage spike into the run rate at twelve times its one-month size.
Future contracted revenue can be useful when separately labeled. Unconverted pilots, verbal commitments and one-time fees should not be presented as current recurring revenue. The largest gap in the TechCrunch reporting is contracted ARR running 70 percent above collected ARR, and a company using all four substitutions can exceed that without any single line being a fabrication.
Start with billing records, matched receipts and a contract register
Test 1. Recurring service run rate. Allocate recurring invoice amounts to their service periods, reconcile them to active contracts, and annualize the current recurring service run rate. Keep one-time fees, future contract starts and uncommitted usage separate. Investigate differences from reported ARR before drawing conclusions.
Test 2. Collections. Match receipts to the invoices they settle and review overdue balances against contractual payment terms. A cash-to-run-rate ratio is a screening indicator; billing timing and growth can move it without a collection problem.
Test 3. Gross dollar retention on a fixed cohort. Freeze the list of logos that were live and invoiced twelve months ago and sum their recurring revenue at that date. Those identical logos' recurring revenue today, with every dollar of upsell, cross-sell, seat expansion, and price increase excluded, divided by that starting figure, is gross dollar retention. Below 85 percent, new bookings replace lost revenue before they add any, and below 70 percent the company must win back more than 30 percent of its base every year to hold revenue flat.
Test 4. Net dollar retention and expansion concentration. Run Test 3 again on the frozen cohort with expansion included. The difference between the two figures is the expansion rate. Then rank the expansion dollars by account and count how many accounts produced half of them. If three customers supply all the expansion behind a 115 percent net figure, that 115 percent depends on three renewal decisions. Require gross and net side by side, and treat a package reporting only net as an incomplete disclosure.
Test 5. Weighted average remaining committed term. For each active contract, record months of committed term remaining, using a one-month screening convention for monthly-cancellable subscriptions and separately recording any right to cancel sooner, then weight by that contract's recurring revenue. A weighted average below six months indicates limited remaining commitment on average. Review the expiry and cancellation schedule; the average does not identify how much revenue can end in any particular quarter.
Test 6. Usage revenue separated from subscription. Split the Test 1 run rate into revenue billed against a contractual minimum and revenue billed on metered consumption with no floor, then compute the trailing-twelve-month coefficient of variation on the metered component. For usage contracts without a minimum, customers can reduce revenue by consuming less. Treat that portion as uncommitted regardless of its share or volatility; use those measures to assess its importance and variability.
Test 7. Customer concentration on the restated figure. Rank customers by restated current subscription revenue and compute the top-one and top-five shares. Run the ranking on the restated figure, because removing pilot and future-start contracts can change concentration in either direction. A top-five share above 30 percent or a top-one share above 10 percent is the threshold used here.
The seven tests restate a $10.0M reported figure to $5.70M of current subscription revenue
The figures below are synthetic and are not client results. They describe a company reporting $10.0M of ARR. Thresholds in this screen are review conventions, not universal benchmarks.
EXHIBIT 1 · FROM REPORTED ARR TO SCENARIO PERSISTENCE
Test 1. In this illustration, all recurring subscription billing is monthly and aligned with its service period. Recurring amounts for the trailing three months totaled $0.640M, $0.650M, and $0.660M. The sum of $1.950M times four gives an invoiced run rate of $7.80M. The $2.20M gap breaks into $1.35M of pilot contracts valued at their post-pilot annual price, $0.60M of signed contracts with start dates in the following two quarters, and $0.25M of verbal renewal commitments from customers whose prior terms had lapsed.
Test 2. Trailing-twelve-month cash collected from customers was $5.95M against an average invoiced run rate of $6.40M, a screening ratio of 0.93. Matching receipts to individual invoices would still be required to assess collections. That same cash measured against an average reported ARR of $8.30M over the period produces 0.72.
Test 6. Test 3 needs a subscription base, so Test 6 runs first. Of the $7.80M invoiced run rate, $2.10M was metered inference billing with no contractual minimum, and its monthly coefficient of variation was 34 percent. Current subscription revenue is therefore $5.70M.
Test 3. The 141 logos live twelve months ago paid $5.40M on the subscription basis. Those 141 logos pay $3.89M today with all expansion stripped out. Gross dollar retention is 72.0 percent.
Test 4. With expansion included, the frozen cohort pays $4.31M, a net dollar retention of 79.8 percent. Expansion contributed $0.42M, and two accounts supplied $0.33M of it, so net retention excluding the expansion dollars from those two accounts is 73.7 percent.
Test 5. Within the $5.70M subscription base, $2.35M is cancellable monthly and $3.35M runs under annual terms with a weighted 7.4 months remaining. Assigning the monthly-cancellable portion one month as a screening convention gives a weighted remaining term of 4.8 months; the convention does not guarantee a month of revenue.
Test 7. The top five customers hold $2.19M of the $5.70M subscription base, a 38 percent share.
If the illustrated company repeats its 72.0 percent gross retention, $4.10M of its current $5.70M subscription base would remain after twelve months, before expansion or new customers. This is a scenario, not a forecast established by the screen.
The 40 percent AI-native median is measured on whatever those companies report as recurring revenue, so it is a directional reference here. The two figures rest on different bases.
The seven tests read trailing billing data, so they cannot value a pilot that has not converted
A company that rebuilt onboarding in month ten still shows the prior cohort's retention for another year, so an analyst running Test 3 reads the rebuild as history. Splitting retention by signup vintage is the partial correction, because a rising series across recent vintages is evidence the rebuild changed customer behavior.
A pilot converting at 90 percent and a pilot converting at 10 percent look identical in a billing export. Only customer references and usage depth inside the pilot separate them, and neither is in the billing export.
Companies that migrated billing platforms mid-year, or that invoice partly through a reseller, produce customer identifiers that do not match across the two dates Test 3 requires, and reconciling them by hand consumes most of the analyst hours in the restatement.
The ChartMogul sample holds roughly 200 AI-native companies identified by automated categorization of scraped web data, and Poyar describes the per-bucket cuts as directional at about 50 companies each. The dataset also skews toward self-serve subscription billing, which pulls the 40 percent median down through cheap plans. AI-native plans under $50 per month showed 23 percent gross and 32 percent net retention. The $50 to $249 band showed 45 percent and 61 percent, and plans above $250 per month showed 70 percent gross and 85 percent net. An enterprise-priced AI company should be screened against the top band, and using 40 percent as the expectation for a company with a $200K average contract value could understate retention.
AI valuation premiums make revenue definitions worth examining
Carta reported median pre-money valuation on AI seed rounds of $17.9M in 2024, 42 percent above the median for non-AI companies at the same stage. Peter Walker, Carta's head of insights, put early-2025 AI seed medians at $19M pre-money against $13M for non-AI, a 46 percent premium.
The time needed depends on the consistency of customer identifiers, billing cadence and contract records. Before agreeing a valuation, distinguish the reported ARR figure from the current recurring service base, verify collection history and test retention assumptions. In the synthetic example, the $10.0M headline and $4.10M retention scenario answer different questions; their difference is not automatically a valuation adjustment.
Sources
- Kyle Poyar, Growth Unhinged, 10 December 2025, the AI churn wave, drawing on the ChartMogul retention study of roughly 3,500 subscription companies.
- TechCrunch, 22 May 2026, on inflated ARR.
- Carta, AI fundraising trends, 2024, and Peter Walker, March 2025.
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