Annual Recurring Revenue

Annual Recurring Revenue (or ARR) is predictable revenue that can be counted on every year thanks to a subscription or contract commitment. It is predictable and recurring revenue generated by customers within a year. If a subscriber commits to a two-year membership for a total of $5,000, then the ARR would be $2,500. ARR is a great measuring gauge for subscription-based businesses because of the clear year-over-year information it provides.