No, upgrading a subscription does not count as a returning subscriber and will not contribute to the Subscriber Growth calculation.
Here is how Recurly defines a Returning Subscriber: A subscriber who was previously a subscriber, churned for at least one day, and has now opened a new subscription. Either subscription could have been in a trial or on any plan, and the subscriber is still considered returning.
When a customer upgrades their subscription, the existing plan is simply switched with the new one. The subscription does not expire and churn in this process, which is a key requirement for being considered a returning subscriber.
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