ARR (Annual Recurring Revenue)
The annualised version of MRR — what your subscription business would earn over a year at the current run-rate.
ARR is MRR × 12. If your business has $50,000 MRR, your ARR is $600,000. It's not necessarily what you've actually billed for the year (that would be billed revenue or cash revenue) — it's the annualised forward-looking run-rate based on the current subscriber base.
ARR is the headline number most SaaS companies report publicly:
- "$1M ARR" means MRR has reached about $83,000/month.
- "$10M ARR" means MRR has reached about $833,000/month.
It exists because ARR is easier to compare across companies and time horizons than MRR. Saying "we grew from $1M to $10M ARR" is more readable than "we grew from $83k to $833k MRR" — same information.
Some businesses report ARR including or excluding annual contracts paid upfront, including or excluding monthly customers, etc. There's no single industry standard. When comparing companies, check what's included in each one's ARR definition.
For internal operations, use MRR — it changes monthly, it ties to customer movement, it's what you actually run the business on. For external storytelling and investor decks, use ARR — that's the language of the genre.
See also
- MRR (Monthly Recurring Revenue) — The total predictable subscription revenue your business earns each month. The headline metric for any SaaS business.
- Churn — The rate at which customers cancel their subscriptions. Compounds against you — small churn improvements drive huge LTV improvements.
- LTV (Lifetime Value) — The total revenue (or gross profit) you expect to earn from a customer across their entire relationship with you.
Ask Cashowa about arr (annual recurring revenue)
Apply this concept to your actual numbers — with verifiable math.