ARR (Annual Recurring Revenue)

Definition

The annualized value of a subscription business's recurring revenue.

Why It Matters

For a monthly-billed product it is twelve times MRR. ARR multiples price growing, team-run software companies, while the founder-run SaaS a searcher buys trades on profit instead, so translate any ARR-multiple ask back to SDE before comparing.

In numbers: A product with 900 customers paying $99 a month runs about $1.07M of ARR; at searcher size the price will still usually anchor to its SDE, not to an ARR multiple.