ARR (Annual Recurring Revenue)
ARR is the subscription revenue a business expects to earn over a year, usually calculated as MRR times 12.
Updated October 1, 2026
ARR (Annual Recurring Revenue) is the subscription revenue your business expects to earn over a year. For most companies it is MRR times 12.
How to calculate ARR
Multiply current MRR by 12, or add up the yearly value of every active subscription.
ARR = MRR × 12
If your MRR is $2,800, your ARR is $33,600.
When to use ARR instead of MRR
- Annual contracts. Businesses that sell yearly plans sign deals in yearly terms.
- Valuation. Investors often value SaaS companies as a multiple of ARR.
- Scale. Large revenue figures are easier to read per year than per month.
Smaller and month-to-month businesses usually track MRR and quote ARR to investors.