Glossary
Annual recurring revenue (ARR)
The annualised value of a company’s recurring subscription contracts at a point in time.
ARR is usually monthly recurring revenue multiplied by twelve, and excludes one-off fees, services and usage that is not contracted. It is the headline scale measure for subscription businesses, and the base for EV/ARR multiples at venture and growth stages.
Definitions vary between companies. Some include contracts signed but not yet live, and some annualise a single strong month. In diligence the useful question is how the reported figure was built, and whether it reconciles to billing and the management accounts.
In Hebrides
Research insights extracts ARR from the data room with the document and page it came from, and flags it when the deck and the management accounts disagree.
Research insights