ARR
ARR is a recurring-revenue metric, calculated as MRR × 12.
- Layer
- Metric
- Defined in
- Metric definitions
- Components
- 2
Authority
This definition follows Non-GAAP financial measure — SEC Regulation G — it is not a GAAP measure, so a registrant publishing it has to reconcile it to the nearest GAAP figure.
Every citation in this system, with the text we read and the date we checked it, is in US GAAP and where these rules come from.
Formula
MRR × 12
Only meaningful for subscriptions. Never for transactional revenue..
A metric without its definition is a number people argue about in meetings. Every metric component in this system requires one — see the rules.
ARR, in use
Quoted from the 3 documents that use the word — what it does to an interface, in the spec's own sentence.
"ARR" means four different things at four companies.
"ARR" means at least four different things across four companies.
Everything in Metric definitions — ARR, EBITDA, net burn, runway, magic number — is a non-GAAP financial measure.
US GAAP, and where these rules come from — Metrics are not GAAP
For founders
The same idea written for a founder: what it costs a startup that ignores it, and what to do in a real month.
- ARR and MRRMonthly recurring revenue is the subscription revenue you'd collect in a month from current customers. Annual recurring revenue is that rate times twelve. Neither is GAAP revenue.
- Deferred revenue for SaaS startups, explainedAn annual prepayment is cash today and revenue over a year. How deferred revenue works under ASC 606, why it’s a liability, and the schedule behind it.
- Burn rate and runway: how to calculate them correctlyGross burn, net burn and months of runway, done the way an investor checks them: from cash, averaged, and with the hires you’ve already committed to.
- MRR vs GAAP revenue under ASC 606MRR and ARR are operating metrics; revenue under ASC 606 is earned over time. How annual prepayments and churn split them, and how to reconcile the two.
Components that render this
The concept is not documentation-only. These are the components that name it in their specification, grouped and stated exactly as the catalog states them.
Components that render the terms it depends on
Little in the catalog names this concept outright, but its definition is built out of others that are named. These render revenue.
9Accounting core (GL)
Family spec10Receivables (AR)
Family specTerms this one depends on
Also in Recurring revenue
Work with this concept
The calculators that compute it and the ledger payloads that carry it. A definition is where a reader starts; these are where they go next.
Defined in Metric definitions. This page is generated from that document, so the two cannot disagree.