Arr
Glossary
ARR
Annual Recurring Revenue (ARR) is the normalised annualised value of a SaaS business's recurring subscription revenue — the headline metric most investors and benchmarks reference when sizing a SaaS company.
ARR includes all contracted recurring subscription revenue annualised (a £1,000/month subscription = £12,000 ARR), but excludes one-off setup fees, professional services, and non-recurring revenue. Closely related metrics: MRR (the monthly equivalent), Net Revenue Retention (how much existing customer ARR grows or shrinks over a year), Gross Revenue Retention (the same with no upsell counted), and Magic Number (sales efficiency ratio). UK SaaS companies are typically valued at multiples of ARR — currently 3-10× depending on growth, profitability, and quality.
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