ARR — Annual Recurring Revenue (advanced)
Definition: The annualized value of all active subscription contracts. The single most important metric for SaaS valuation.
Example
500 customers paying $200/mo = $100K MRR = $1.2M ARR. SaaS companies are often valued at 5-15x ARR.
When you'll hear it
ARR shows up most often in board meetings, quarterly business reviews, and strategy off-sites. When someone uses it, they're usually referring to annual recurring revenue (advanced) — and they expect the room to already know what that means.
FAQs
What does ARR stand for?
ARR stands for Annual Recurring Revenue (advanced).
What does ARR mean in business and finance?
The annualized value of all active subscription contracts. The single most important metric for SaaS valuation.
Where will I hear ARR used at work?
ARR comes up most often in board meetings, quarterly business reviews, and strategy off-sites. It's used as shorthand for annual recurring revenue (advanced), so people assume you already know the term.
Related terms
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