ARR (Annual Recurring Revenue), also known as Annual Recurring Revenue, is a performance indicator primarily used in the software as a service (SaaS) and online services industry. It measures the total amount of recurring revenue generated by the company over a one-year period.
ARR is calculated by taking into account all the recurring revenues generated by the company, whether it’s from subscriptions, licenses, services, or any other source of recurring revenue. It typically excludes one-time or exceptional revenues that occur only once.
ARR is a key indicator for companies offering online services or software as a service because it allows them to track the evolution of their revenues on an annual basis and gain a better understanding of the stability of their business model. It is also useful for assessing company growth and determining the resources needed to support that growth.