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.

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