ARR vs LTV
ARR (Annual Recurring Revenue (advanced)) and LTV (Lifetime Value) both come up in business conversations and get confused. Here's the plain-English difference, side by side, so you can use each one with confidence.
The key difference: ARR refers to annual recurring revenue (advanced), while LTV refers to lifetime value — they describe different things even when they show up in the same sentence.
ARR — Annual Recurring Revenue (advanced)
The annualized value of all active subscription contracts. The single most important metric for SaaS valuation.
LTV — Lifetime Value
The total revenue a business expects from a customer throughout their entire relationship.
When to use ARR
Reach for "ARR" when the conversation is specifically about annual recurring revenue (advanced). The annualized value of all active subscription contracts. The single most important metric for SaaS valuation.
When to use LTV
Reach for "LTV" when the conversation is specifically about lifetime value. The total revenue a business expects from a customer throughout their entire relationship.
FAQs
What is the difference between ARR and LTV?
ARR stands for Annual Recurring Revenue (advanced) — The annualized value of all active subscription contracts. The single most important metric for SaaS valuation. LTV stands for Lifetime Value — The total revenue a business expects from a customer throughout their entire relationship.
Are ARR and LTV the same thing?
No. They're often used in the same conversation because they're related, but they describe different concepts. ARR = Annual Recurring Revenue (advanced). LTV = Lifetime Value.
When should I use ARR vs LTV?
Use ARR when you're specifically referring to annual recurring revenue (advanced). Use LTV when the topic is lifetime value.