Definition
Annual Recurring Revenue is the yearly view of subscription revenue. For monthly SaaS it is often MRR × 12. For annual contracts it is the contracted recurring value, not last month’s lucky spike. ARR is for planning; cash collected can lag.
In the room
How the word shows up in a real conversation.
₹4 lakh MRR is ₹48 lakh ARR. A one-time ₹10 lakh project does not make you a ₹58 lakh ARR company.
Formula
ARR ≈ MRR × 12 (for monthly subscriptions)
Common mistake
Annualising a single good month after a big deal. That is a spike, not ARR.
See also
Monthly Recurring Revenue (MRR)
Predictable subscription revenue normalised to a month, excluding one-off fees.
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Net Revenue Retention (NRR)
How revenue from last year’s customers changed after expansion, contraction, and churn.
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SaaS (Software as a Service)
Cloud-based software delivery model where applications are hosted and accessed online.
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Churn rate
Percentage of customers who stop using a service over a given period.
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