Annual Recurring Revenue
Definition
Annual Recurring Revenue: Annual Recurring Revenue (ARR) is the yearly value of recurring subscription revenue, calculated as MRR multiplied by 12. ARR is the primary metric for measuring the size and growth of subscription businesses, commonly used in enterprise SaaS where annual contracts are standard.
Example Usage
“We crossed $1M ARR in 18 months, hitting the milestone that many VCs look for in Series A companies.”
Common Misconceptions
Related Terms
Monthly Recurring Revenue
Monthly Recurring Revenue (MRR) is the predictable revenue a subscription business expects to receive every month. It's calculated by multiplying the...
Net Revenue Retention
Net Revenue Retention measures the percentage of recurring revenue retained from existing customers over a period, including expansions, contractions,...
Churn Rate
Churn rate measures the percentage of customers or revenue lost over a period. Customer churn counts lost accounts, while revenue churn measures lost...
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