ARR (Annual Recurring Revenue)
ARR (Annual Recurring Revenue) is the annualised value of a company's recurring subscription revenue — by convention, MRR × 12. It is a point-in-time snapshot of contracted run rate, not a forecast of the next twelve months' revenue.
Formula
Worked example
MRR of $83,500 at the end of June is ARR of $1,002,000 — the company "crossed $1M ARR" that month, regardless of what it actually billed over the past year.
ARR is the standard yardstick for staging SaaS companies ($1M ARR, $10M ARR) precisely because it is a snapshot: it says what the business is worth per year if nothing changed today. Trailing-twelve-month revenue answers a different question and is usually lower for a growing company.
Enterprise SaaS with mostly annual contracts often computes ARR directly from contract values rather than via MRR; both approaches are fine as long as non-recurring revenue stays out.
Compute it: MRR & ARR calculator