Churn rate is the percentage of customers (or revenue) lost over a defined period, typically expressed as an annualised figure. Churn can be measured in customer terms (number of customers lost) or revenue terms (value of revenue lost), and the two figures often differ where small customers churn at higher rates than large ones.
In Australian SaaS and subscription M&A, monthly customer churn above 2% (which annualises to roughly 22% gross customer churn) typically signals retention concerns that affect valuation. Churn definitions should be scrutinised in diligence, as different definitions (gross vs net, customer vs revenue, contract-end vs cancellation) produce materially different figures.