The annuity engine — recurring contracts, renewals at risk, and service-quality SLAs across the monitored base.
$26M of the $164M renewal wall is flagged at-risk against a $289M recurring base retaining at 98% NRR. Defend the at-risk slice and attach ON-X on every install — retention plus mix is the number the PE owner values most.
6 of 6 headline metrics improving vs prior · still off target: Recurring Mix 9.1% vs 10.0%, Gross Revenue Retention 94.0% vs 96.0%, First Time Fix Rate 93.0% vs 95.0%
Each point of churn on the $289M base is $3M of ARR gone — far cheaper to retain than to re-win.
Each churn point on the base ≈ recurring revenue lost.
Recurring mix 9.1% sits 35.9pts below the 45% target; ON-X is the best economics in the book at 62% GM and 110% NRR.
The annuity only renews if service holds: SLA 97.2% sits 1.8pts under 99% and first-time-fix 93% is -3pts under 90%.
Recurring revenue is Pavion's most valuable asset — $289M of ARR on 19,500 contracts, renewing at 98%. This view is where it's defended: which service lines carry the margin, which renewals are at risk, and whether service quality is holding up the promise.
ON-X monitoring is the highest-margin, highest-retention line — the one to attach on every install.
Next four quarters. At-risk = churn-flagged or contraction-likely.
Defend first: the $26M at-risk slice. Each point of churn on the $289M base is $3M of ARR gone — far cheaper to retain than to re-win.
Recurring mix is 40% vs a 45% target; the gap is monitoring not attached at install.
ON-X is the lever: 62% GM and 110% NRR — the best economics in the book. Attaching it to every Integration install both raises margin and lifts the recurring mix.
Test & Inspection is the moat: 6,900 code-mandated contracts — sticky and recurring even at lower margin; the foot in the door for monitoring upsell.
The annuity only renews if the service is good — these are the SLAs behind it.