Glossary

ARR

Also called annual recurring revenue, MRR vs ARR.

Annual recurring revenue: the yearly run rate of active subscriptions, usually MRR × 12.

ARR = MRR × 12. A business with $8,500 of MRR has an ARR of $102,000. Like MRR, it counts subscriptions that are paying now, and leaves out one-time fees, usage-based charges and free plans.

MRRARR
MeasuresMonthly run rateYearly run rate
A $1,200 yearly plan adds$100$1,200
Common inMonthly plans, early SaaSAnnual contracts, board reporting

Neither is cash or revenue: a yearly plan paid today adds its whole price to this month's revenue and only a twelfth of it to MRR. Use MRR to see monthly moves (new, expansion, contraction, churn) and ARR when contracts are yearly. See the SaaS metrics dashboard.

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