What is Annual Recurring Revenue (ARR)?
The annualized run-rate of recurring revenue - the headline number for SaaS scale and valuation.
Annual Recurring Revenue (ARR): definition
ARR is the yearly counterpart to MRR and the number most often used to describe a subscription company’s scale ("a $2M ARR business"). It captures only committed, recurring revenue - not one-time fees or variable usage - which is exactly why investors treat it as the durable core worth valuing.
ARR
ARR = MRR × 12
ARR reflects the run-rate of recurring revenue only. Add-ons, expansion, and churn move ARR the same way they move MRR.
How Fintra handles it
Fintra reports ARR from the same recurring-revenue base as MRR, reconciled to the ledger, and lets forecasts model ARR under base, upside, and downside scenarios. Because the number is grounded in billing and recognized revenue, the ARR you present to a board or investor ties back to auditable books.
Worked example
Frequently asked questions
How is ARR different from MRR?
They measure the same recurring base at different scales: ARR is the annualized figure, usually MRR × 12. Businesses that bill annually often lead with ARR; those that bill monthly often lead with MRR. Both exclude one-time and purely variable revenue.
Is ARR the same as revenue?
No. ARR is a forward-looking run-rate of committed recurring revenue at a point in time. GAAP revenue is what is actually recognized over a period under ASC 606, including one-time and usage revenue. Diligence looks at both and how they reconcile.
Why do investors focus on ARR?
Because recurring revenue is predictable and compounds, making it the most valuable and forecastable part of a subscription business. ARR, combined with net revenue retention and growth rate, is a strong shorthand for durability and scale.
Does Fintra report ARR?
Yes. Fintra computes ARR from the recurring-revenue base on the shared ledger and models it in scenario forecasts, so the number you report is reconcilable to your audited books rather than a standalone estimate.
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