What is ARR?

ARR (annual recurring revenue) is the annualized value of a subscription business's recurring contracts — the metric SaaS companies are priced on. MRR is its monthly counterpart.

Discipline matters at the edges: one-time services, usage spikes, and signed-but-not-live contracts do not belong in ARR, and diligence will re-derive the number. Multiples of ARR are the lingua franca of SaaS valuation.