Metrics & Performance
Annual Recurring Revenue
Also Known As
ARRRecurring RevenueMRR
Annual Recurring Revenue (ARR) is the yearly value of a company's recurring subscription revenue, calculated by annualizing monthly recurring revenue (MRR × 12).
What is ARR?
ARR is the gold standard metric for subscription businesses. It represents the predictable, recurring revenue that a company expects to receive annually from active subscriptions.
Calculating ARR
Simple Formula:
ARR = MRR × 12
Component Formula:
ARR = Beginning ARR
+ New ARR
+ Expansion ARR
- Churned ARR
- Contraction ARR
ARR Benchmarks for Fundraising
| Stage | Typical ARR |
|---|---|
| Seed | $0 - $500K |
| Series A | $1M - $3M |
| Series B | $5M - $15M |
| Series C | $15M - $50M |
ARR Growth Rate
| Growth Rate | Assessment |
|---|---|
| 3x YoY | Exceptional |
| 2x YoY | Strong |
| 1.5x YoY | Good |
| <1.5x YoY | Concerning |
ARR in Studio Context
Studio startups may reach ARR milestones faster due to:
- GTM playbooks and support
- Shared sales resources
- Customer introductions
- Proven go-to-market motions
Example Usage
“The company crossed $1M ARR in just 14 months, setting them up for a strong Series A.”