ARR (Annual Recurring Revenue)

Annual Recurring Revenue (ARR) is the annualized value of recurring subscription contracts. It represents the yearly revenue a business expects from its current subscription base.

Key Details

  • Calculated as MRR multiplied by 12, or by summing annualized contract values
  • Primary metric for enterprise SaaS companies with annual contracts
  • Distinguishes between contracted ARR (committed) and actual recognized revenue
  • Used by investors and analysts to value subscription businesses

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