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Board-ready annualization
A company is currently running at 145,000 in MRR.
Inputs
- MRR: 145,000
Steps
- ARR = 145,000 x 12 = 1,740,000
Result
- Annual recurring revenue is 1,740,000.
ARR Calculator
Annualize recurring monthly revenue to estimate annual recurring revenue.
ARR Calculator
Result
Calculating the sample result.
Why it matters
ARR is the top-line recurring revenue view many SaaS leaders use in board materials, fundraising, and annual planning.
When to use
- Turning MRR into a yearly recurring run-rate
- Comparing business size across SaaS peers
- Translating monthly movement into annual impact
Inputs & Outputs
Inputs
- Monthly recurring revenue should represent normalized recurring monthly revenue only.
Outputs
- ARR shows the annual run-rate if the current recurring base stayed flat for a full year.
- Quarterly recurring run-rate gives a useful shorter conversion for operating reviews.
ARR annualization
Multiply monthly recurring revenue by 12 to convert a monthly recurring run-rate into a yearly recurring run-rate.
ARR = MRR x 12
Worked example
Edge cases & caveats
- ARR is a run-rate, not a guarantee of recognized annual revenue.
- Annualizing a volatile MRR number can overstate stability.
Frequently Asked Questions
Should one-time implementation fees be in ARR?
No. ARR should stay focused on recurring subscription or recurring contracted revenue.
Can ARR go down even if bookings are positive?
Yes. Churn and contraction can offset new bookings enough to reduce the recurring base.
Keep going
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