Annual Recurring Revenue
Also: ARR
The total predictable, recurring revenue from subscriptions normalised to a yearly figure.
Why it matters
ARR is the headline measure of a subscription business's scale and the foundation for most growth and valuation conversations. It captures only recurring revenue, stripping out one-off fees, so it reflects the durable base. Its growth rate is what investors and operators watch most.
How it is calculated
ARR = sum of the annualised value of all active recurring subscriptions
What good looks like
ARR itself is a scale number, the growth rate and the quality (net of churn, see NRR) matter more. Be careful to exclude one-time and non-recurring revenue, or ARR overstates the durable base.
Related terms
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