Annual Recurring Revenue (ARR)
Annual Recurring Revenue (ARR) is the predictable revenue a subscription business expects to earn from its contracts over a single year.
ARR counts only recurring subscription revenue, not one-off charges like setup fees or professional services. For monthly plans it is calculated by multiplying Monthly Recurring Revenue (MRR) by 12. For annual contracts it is the yearly contract value, summed across all active customers, and adjusted for upgrades, downgrades, and cancellations.
ARR is a core health metric for SaaS businesses because it turns a stream of subscriptions into a single, forward-looking number. It is used to track growth, set targets, and communicate scale to investors, and changes in ARR reveal whether expansion is outpacing churn.
Because ARR depends on customers renewing and expanding, protecting it is largely a retention problem. Listening to customers and shipping what they ask for, with a tool like Feedjolt to manage that feedback loop, helps defend and grow the recurring revenue ARR represents.