Annual recurring revenue (ARR)

What does Annual recurring revenue (ARR) mean?

ARR is a company's recurring subscription revenue, scaled to a year, at a given moment. It usually leaves out one-off fees such as setup and services. Example: 400 customers each paying 250 a month is monthly recurring revenue (MRR) of 100,000, or ARR of 1.2 million. An ARR bridge explains how it moved: opening ARR plus new customers plus expansion (upgrades) minus contraction (downgrades) minus churn equals closing ARR. ARR is a snapshot, not the revenue in the accounts, and companies define it in slightly different ways, so check the definition.