Annual Recurring Revenue
The predictable, subscription-based revenue a business expects to receive over a year, commonly used to evaluate software and membership-based businesses.
Annual recurring revenue (ARR) strips out one-time or irregular sales and focuses only on revenue that’s contractually recurring, giving a cleaner view of a subscription business’s stable, ongoing income base.
Lenders and investors evaluating a recurring-revenue business often weigh ARR more heavily than total revenue, since it better predicts future cash flow than a mix of one-time and recurring sales would.
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