Net new recurring revenue is the number, and it is lumpy

The best single measure of a security platform's momentum is how much recurring revenue it adds each quarter. It is also one of the most volatile, because a few large deals can swing it either way.

Momentum is a rate of change

Total recurring revenue always goes up for a growing company, so it hides slowdowns. Net new recurring revenue shows the pace of that growth, which is what the valuation is really built on. When it accelerates, the shares tend to follow; when it slows, they tend to fall even while revenue still grows.

The difficulty is noise. Averaging over several quarters is the only honest way to read it.

What I'm watching

• Net new recurring revenue, averaged over several quarters
• Module adoption per customer, which drives expansion
• Churn and down-sell after any service disruption

Where I stand

Flat. The averaged line is steady, and steady is roughly what the price already assumes.

What would change my mind

Several quarters of acceleration in the averaged line. That is the signal that the platform is taking share faster than the market expects.