ARR is a key financial metric that shows the predictable revenue that a company expects to receive annually from existing customers for providing them with products or services. ARR are typically subscriptions and/or usage-based & transactional revenues where 12 months+ historical Net Revenue Retention (NRR) is above 100%.
ARR for any given month is the same as MRR multiplied by 12 months. The ARR of a given period is expressed as an annual run rate for all contracts with Revenue Recognition Dates before the period close date. ARR differs from CARR mainly due to its time onboard a customer. Additionally, the customer may want the contract to start on a specific date. Finally, contracts with start dates after the first of the month are prorated for the number of days active in that month. Adjustment for seasonality may be required to provide a fair ARR.
ARR is a key financial metric that shows the predictable revenue that a company expects to receive annually from existing customers for providing them with products or services. ARR are typically subscriptions and/or usage-based & transactional revenues where 12 months+ historical Net Revenue Retention (NRR) is above 100%. ARR for any given month is the same as MRR multiplied by 12 months. The ARR of a given period is expressed as an annual run rate for all contracts with Revenue Recognition Dates before the period close date. ARR differs from CARR mainly due to its time onboard a customer. Additionally, the customer may want the contract to start on a specific date. Finally, contracts with start dates after the first of the month are prorated for the number of days active in that month. Adjustment for seasonality may be required to provide a fair ARR.
