Revenue Metrics

Annual Recurring Revenue (ARR)

The annualised value of a subscription business's recurring revenue, used for high-level planning and fundraising.

ARR is simply MRR multiplied by twelve. While MRR gives you a monthly pulse, ARR gives investors and boards a single headline number comparable across companies of different billing frequencies. ARR is particularly important in enterprise sales, where contracts are annual by default and the deal value is expressed yearly. Crucially, ARR should only include recurring, contracted revenue — not professional services, setup fees, or variable usage charges that could disappear next year. Growth in ARR is one of the primary criteria venture investors use to value SaaS businesses, with common benchmarks being $1M ARR as early traction, $10M ARR as product-market fit confirmation, and $100M ARR as a meaningful scale milestone.