Glossary / Annual Run Rate
Annual Run Rate
Annual Run Rate (ARR) is a metric used to estimate the annual revenue or sales of a company based on its current performance. It is calculated by multiplying the revenue or sales of a specific period (usually a month or a quarter) by the number of periods in a year. The formula for calculating ARR is: ARR = Revenue or Sales in a specific period x Number of periods in a year For example, if a company generates $100,000 in sales in a quarter, the ARR would be: ARR = $100,000 x 4 = $400,000 This means that the company is estimated to generate $400,000 in sales for the entire year based on its current performance. ARR is often used by investors, analysts, and management to assess the growth and financial performance of a company.
