ARR (Annual Recurring Revenue)
Your MRR multiplied by 12 - the annualized view of your subscription revenue.
What it means
Annual Recurring Revenue projects your current monthly revenue run-rate over a full year. It's the preferred metric when discussing fundraising, company valuation, or long-term planning. ARR smooths out seasonal fluctuations and gives stakeholders a big-picture understanding of your revenue trajectory.
Formula
ARR = MRR × 12
Why it matters
ARR is the benchmark investors use to categorize your startup's stage. Crossing $1M ARR, $10M ARR, and $100M ARR are widely recognized milestones. It's also a cleaner number for year-over-year growth comparisons and board-level reporting.
What is ARR in SaaS?
ARR stands for Annual Recurring Revenue. It's your Monthly Recurring Revenue (MRR) multiplied by 12 and represents the yearly value of your subscription revenue.
When should I use ARR vs MRR?
Use ARR when communicating with investors, in board meetings, or for year-over-year comparisons. Use MRR for monthly operational tracking and short-term forecasting.
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