How to use the growth magic number calculator
The magic number shows how much recurring revenue your sales and marketing spend brought back. The most widely used definition is (current-quarter ending ARR − prior-quarter ending ARR) ÷ prior-quarter S&M spend: this quarter's increase in annual recurring revenue divided by the spend from the quarter before, because marketing dollars take time to turn into signed contracts.
The definition varies in practice. Some teams use new ARR only instead of net new ARR, some use marketing program spend without sales payroll, and some divide by the same quarter's spend. This calculator therefore prints the exact period and cost bucket it used in each result label. Check that the formula matches before comparing your number with any published figure.
The annualized magic number is the quarterly value shown on screen multiplied by the 4 quarters in a year. Claims about what level is "good" are quoted inconsistently across sources, so this calculator ships with no benchmark. Enter your own target and the result is compared only against that.
Frequently asked questions
Yes. If current-quarter ARR is lower than the prior quarter, net new ARR is negative and the magic number is shown as a negative multiple, meaning recurring revenue shrank despite the spend.
It depends on the company. Most include sales payroll plus marketing programs, but some count programs only. Record the scope you used and keep it identical every quarter so the numbers stay comparable.