Revenue Metrics
ARR (Annual Recurring Revenue)
The annualized value of recurring subscription revenue, calculated as MRR x 12.
Annual Recurring Revenue (ARR) is MRR multiplied by 12. It represents the yearly value of all recurring subscriptions, giving buyers and investors a standardized way to compare businesses of different sizes. ARR is the primary metric used for valuing SaaS businesses above $1M in value. Businesses typically trade at 3-10x ARR depending on growth rate, churn, and market position.
Related Terms
MRR (Monthly Recurring Revenue)
The predictable revenue a business earns every month from active subscriptions.
SaaS Valuation
The process of determining the fair market value of a software-as-a-service business.
Revenue Multiple
A multiplier applied to revenue to estimate business value (e.g., 3x annual revenue).