Glossary · Business

ARR

Annual Recurring Revenue–the yearly value of recurring subscription revenue, typically MRR multiplied by 12.

Annual Recurring Revenue (ARR) is the annualized value of recurring subscription revenue, most commonly calculated as MRR × 12. ARR provides a higher-level view of a subscription business's revenue and is the standard metric used for SaaS company valuation, investor reporting, and strategic planning. ARR smooths out monthly fluctuations and seasonal patterns, making it useful for year-over-year comparisons and growth rate calculations. For companies with annual contracts, ARR is calculated directly from contract values rather than multiplying MRR. Key ARR milestones ($1M, $10M, $100M) are commonly used benchmarks in the SaaS industry.

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