Source: https://www.revvly.ai/glossary/arr

[Glossary](https://www.revvly.ai/glossary)

# Annual recurring revenue (ARR)

Also: ARR

**Annual recurring revenue is the yearly value of a business’s active recurring subscriptions: the run-rate of contracted, repeating revenue if nothing changed. It excludes one-time fees. ARR is the headline size metric for annual-contract businesses, while monthly-billed businesses usually watch MRR alongside it.**

## Formula

`ARR = sum of each active subscription’s billed price, normalised to one year`

## How to read it

ARR and MRR describe the same revenue on different scales. Derive each from the billed period cost rather than multiplying or dividing one by twelve, or small rounding errors accumulate and the two figures stop agreeing. ARR is not recognised revenue and it is not cash collected.

## In Revvly

- [Docs: reference metrics](https://www.revvly.ai/docs/reference/metrics)

## Further reading

- [ARR vs MRR: why finance teams need both, and how they connect](https://www.revvly.ai/blog/arr-vs-mrr-finance-teams)
- [ARR waterfall: how to build one and what it's actually telling you.](https://www.revvly.ai/blog/arr-waterfall-how-to-build-and-read-it)

## Related terms

- [Monthly recurring revenue (MRR)](https://www.revvly.ai/glossary/mrr)
- [Net revenue retention (NRR)](https://www.revvly.ai/glossary/nrr)
- [Bookings, billings and revenue](https://www.revvly.ai/glossary/bookings-billings-revenue)

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Orchestrate the flow of revenue.

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