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ARR (Annual Recurring Revenue) is the annualized value of your recurring subscription revenue. Calculate it: MRR × 12 or sum of all annual subscriptions. ARR excludes one-time fees, setup costs, and variable usage charges. It's the key metric for SaaS valuation—companies trade at 5-20x ARR depending on growth rate. ARR milestones: $100K (validation), $1M (PMF), $10M (scale), $100M (enterprise value).
Key What Is Arr Takeaways
- ARR = MRR × 12 or sum of annual subscriptions
- Excludes one-time fees and variable charges
- Key SaaS valuation metric (5-20x multiples)
- $100K ARR = validation milestone
- $1M ARR = product-market fit
- $10M ARR = scale stage
- Net new ARR = new + expansion - contraction - churn
- 40%+ YoY growth considered strong
What Is Arr Statistics
5-20x
ARR valuation multiples
$1M
PMF milestone
40%+
strong YoY growth
$10M
scale stage
What Is Arr FAQ
Expert Tips
Track net new ARR
Shows true growth accounting for all changes
Segment ARR by cohort
Understand which segments drive growth
Don't include variable revenue
Only predictable recurring counts