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ARR

Metrics beginner FOUNDERCFO

What is ARR?

ARR is annual recurring revenue, the annualized subscription revenue base of a SaaS company.

Also known as: Annual Recurring Revenue

ARR Formula

ARR = MRR × 12
Variable Meaning
MRR Monthly recurring revenue.
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How to Calculate ARR

Worked example

MRR
$10,000
→ ARR
$120,000

ARR Calculator

Try it with your numbers

ARR$120,000
ARR = MRR × 12
Variable Meaning
MRR Monthly recurring revenue.

Worked example

MRR
$10,000
→ ARR
$120,000

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Prefer a dedicated page? Use the ARR calculator.

Common Mistakes with ARR

  • Getting stuck at a churn plateau around $5M-$10M ARR because the team does not know its unit economics (CAC, LTV, ARPA, ACV, churn, payback months).

ARR vs Related Metrics

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Related Concepts

Built from

  • MRR — MRR is monthly recurring revenue, the normalized monthly subscription revenue base of a Sa…
  • Total Revenue — Total Revenue is the total income generated over a period, including recurring and non-rec…

Related terms

  • Exit — Exit refers to preparing for and completing a liquidity event such as an acquisition or M&…
  • Outbound Sales — Outbound Sales is a sales motion where the company proactively prospects and reaches out t…
  • Venture Capital — Venture Capital is equity financing from investors seeking high-growth outcomes and large…
  • LTV — LTV is customer lifetime value, the estimated revenue value of a customer over their lifes…
  • CAC — CAC is customer acquisition cost, the sales and marketing investment required to acquire c…
  • Valuation — Valuation is the estimated enterprise or equity value of a SaaS company, often informed by…
  • Revenue-Based Financing — Revenue-Based Financing is a form of funding repaid as a fixed percentage of ongoing reven…

Compare

  • ARR vs LTV to CAC Ratio — LTV to CAC Ratio compares customer lifetime value against customer acquisition cost to eva…