The predictable revenue a subscription business expects to receive over a full year from active subscriptions, typically calculated as MRR multiplied by 12.
Why it matters
ARR is the headline growth metric most commonly cited by SaaS and subscription businesses, particularly when discussing fundraising, valuation, or year-over-year growth, because it normalizes revenue into a consistent annual comparison regardless of contract length or billing cadence.
In a sentence
"We closed the year at $4M in ARR, up from $1.5M the year before."
Related terms
- Often confused with: MRR (ARR is simply MRR annualized; the two describe the same underlying revenue at different time scales).
- Synonyms: Annualized recurring revenue.