Glossary / Annual Recurring Revenue

Annual Recurring Revenue

Annual Recurring Revenue (ARR) is a metric used by businesses to measure the predictable and recurring revenue generated from subscription-based products or services over a 12-month period. It represents the total value of all active subscriptions or contracts that will renew in the next year. ARR is often used by Software-as-a-Service (SaaS) companies to assess their financial performance and growth potential. It provides a more accurate representation of a company's revenue stream compared to monthly or quarterly revenue figures, as it takes into account the long-term value of customer subscriptions. ARR can be calculated by multiplying the average monthly recurring revenue (MRR) by 12.