SaaS Marketing
ARR (Annual Recurring Revenue)
Quick definition
ARR is the annualized value of a SaaS company's recurring subscription revenue — MRR × 12.
ARR is the standard top-line metric used by SaaS boards, investors, and most enterprise sales teams. It's the cleanest single number for measuring SaaS growth.
Why ARR (Annual Recurring Revenue) matters
ARR excludes one-time setup fees, services revenue, and other non-recurring income. It reflects only the subscription engine.
How ARR (Annual Recurring Revenue) works in practice
Compare year-over-year ARR growth rates against the SaaS Rule of 40 (growth rate + profit margin ≥ 40%) to gauge whether a business is growth-efficient.