ARR (annual recurring revenue)

MRR × 12: the yearly run-rate of the current subscription base. It projects today's level forward, not a prediction of what the next twelve months will actually earn, since churn and growth both move it.

ARR carries no information MRR doesn't: it is the same number in a bigger unit. That matters mostly for how it reads. On a small app, one $99.99 annual subscriber moves ARR by $99.99 and MRR by $8.33, so ARR charts look dramatic for reasons that are pure arithmetic.

It also invites a specific mistake: treating ARR as "revenue this year". It is the annualized value of the base right now. Every subscriber who churns tomorrow was counted in it today.

See: Metrics methodology →