ARR (Annual Recurring Revenue)
The annualised value of a subscription business's recurring revenue, excluding one-off fees.
ARR is the value of contracted recurring revenue normalised to a year. A customer paying $1,000 a month contributes $12,000 of ARR regardless of contract length.
It excludes one-time charges: setup fees, professional services, and hardware are not ARR, however reliably they recur in aggregate. Investors discount inflated ARR quickly, and being caught doing it damages credibility more than a smaller honest number would have.
ARR is the primary input to SaaS valuation multiples. At seed, 5–10x ARR is a common range; at Series A with strong growth, 10–20x. The multiple is set far more by growth rate than by the absolute number.