Metrics

Annual Recurring Revenue (ARR)

Annual Recurring Revenue (ARR) is the annualized, predictable subscription revenue. MRR × 12, adjusted for annual contracts.

ARR is the valuation metric of SaaS. Investors price companies on multiples of forward ARR; "$10M ARR" is the headline number raised at Series B.

ARR vs MRR: same concept, different time horizon. ARR is preferred when annual contracts dominate; MRR is preferred when monthly billing dominates.

ARR growth rate matters more than absolute number for early-stage. 'Triple-triple-double-double-double' is the canonical fast-growth path: 3×, 3×, 2×, 2×, 2× year-over-year.

Related terms

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