Annual Recurring Revenue (ARR)

ARR offers a long‑view snapshot of recurring scale by annualizing contract value. It helps leaders compare momentum across quarters without the noise of monthly fluctuations.

Annual Recurring Revenue is the annualized value of active subscription contracts. Calculated as 12×MRR or by summing contracted annual values.

Treat ARR as a contracted, durable figure. Avoid annualizing a spiky month and keep non‑recurring revenue separate so the signal remains clean and comparable.

Annual Recurring Revenue is the annualized value of all active subscriptions. Most teams compute ARR as 12×MRR, but enterprise contracts may be summed by their contracted annual values. ARR smooths short‑term monthly swings and communicates scale to investors and leadership. Keep ARR strict by excluding non‑recurring revenue and pipeline. When ARR grows consistently, your run‑rate business is scaling in a durable way.

ARR is annualized MRR.

Use 12×MRR for monthly contracts and contracted annual values for enterprise deals. Keep definitions consistent across reporting periods.

$10k MRR → $120k ARR.

When mixing monthly and annual plans, normalize each to an annual value before presenting ARR so the figure reflects true run‑rate.

Annualizing an atypical month, including one‑time items, or double‑counting multi‑year prepayments will distort ARR.

Seed: ~$1–3M ARR; Series A: ~$3–10M; varies widely by market.

ARR varies widely by stage and market. Track composition and growth rate over time rather than chasing absolute targets.

Report contracted ARR, reconcile to billing systems, and separate pipeline or uncontracted deals for clarity.

ARR pairs with MRR (monthly view) and NRR (cohort durability) to show scale and health together.