What does ARR stand for?

Annual recurring revenue

When you hear the term ‘ARR’, it’s often used in a business setting. ARR stands for ‘annual recurring revenue.’ It’s a metric that businesses use to predict how much money they expect to make each year, usually from regular payments like subscriptions.

Here’s a simple way to understand it: Let’s say a company named ‘Blue Sky’ has 12,000 people who pay $50 each for a yearly subscription. This means Blue Sky’s ARR is $600,000. The company can then use this figure to plan their financial strategies for the coming year.

So, why is ARR important? It’s a key measure for every business because it helps them to set targets. These goals can be for the current year or even for the next year. By keeping an eye on the ARR, a business can make sure it’s on track to meet or beat these goals.

So, next time when you come across ‘ARR’ in a business conversation, you know it’s all about annual recurring revenue.

Example for using ‘ARR’ in a conversation

Hey, did you hear about that new business?

Yeah, I did! They’re all about ARR.

ARR? What’s that?

It stands for Annual Recurring Revenue. It’s the money a business expects to make each year from subscriptions and stuff.