ARR and Net Dollar Retention

This problem practices how to assess the quality of SaaS growth, not just the speed of it. Candidates need to understand the difference between ARR, which shows total recurring revenue growth, and net dollar retention, which shows whether the existing customer base is expanding, stable, or shrinking after upsells, downgrades, and churn. Interviewers ask this because a company can post strong ARR growth while still having weak customer retention, which can signal that growth is being driven by heavy new sales efforts rather than a durable product and customer base.