ARR — Meaning and details

Annual Recurring Revenue

Annual Recurring Revenue (ARR) is a metric used primarily by SaaS or subscription businesses that have term subscription agreements, representing the value of the contracted recurring revenue components of your term subscriptions normalized to a one-year period. ARR is a subset of MRR (Monthly Recurring Revenue) and is used to measure the predictability and health of the revenue stream.

ARR is typically calculated by taking the monthly recurring revenue (MRR) and multiplying it by 12. For instance, if a company's MRR is $10,000, its ARR would be $10,000 x 12, or $120,000.