ARR (Annual Recurring Revenue)

The annualised value of a subscription company’s active contracts at a point in time: a stock, not a flow, moved each period by new business, expansion and churn. The number software companies are measured and valued on, distinct from revenue, which is ARR earned through the period. A quarter’s closing ARR is the next quarter’s opening, and every retention metric is an identity on that roll-forward.

Where ARR (Annual Recurring Revenue) comes up

SaaS Operating Models: ARR, Sales Capacity, Billings and the Metrics That FollowA subscription business is a stock moved by flows, sold by a team with a capacity, and paid for before it is delivered.Read the guide — 11 min

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SaaS operating model guide

Related Technology terms

Net Revenue Retention (NRR)CAC Payback LTV to CAC Magic Number

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