ARR
Annual Recurring Revenue — the value of all recurring subscription revenue normalized to a one-year run-rate as of the period close. The headline operating metric for a subscription business; every growth and efficiency ratio (NRR, GRR, magic number, CAC payback, Rule of 40) is calibrated against it. Excludes one-time fees, professional services, and non-contractual usage. Common pitfall: confusing ARR (contracted recurring) with revenue (recognized) or with CARR (contracted incl. not-yet-live) — the SMSB standard draws sharp lines between them, and boards expect the same discipline. The KpiVarianceTable widget surfaces forecast / actual / variance / status / future-forecast columns against the same field. — Sales KPI anchored to SaaS Metrics Standards Board.
Rogue ID: sales.arr
Type: Currency
Domain: Sales
Definition
Annual Recurring Revenue — the value of all recurring subscription revenue normalized to a one-year run-rate as of the period close. The headline operating metric for a subscription business; every growth and efficiency ratio (NRR, GRR, magic number, CAC payback, Rule of 40) is calibrated against it. Excludes one-time fees, professional services, and non-contractual usage. Common pitfall: confusing ARR (contracted recurring) with revenue (recognized) or with CARR (contracted incl. not-yet-live) — the SMSB standard draws sharp lines between them, and boards expect the same discipline. The KpiVarianceTable widget surfaces forecast / actual / variance / status / future-forecast columns against the same field.
Formula
ARR = Sum of annualized value of all active recurring subscription contracts at period close. Per SMSB: includes only the recurring portion of contracts that are live (delivered / in production). Excludes one-time fees, professional services, and usage that is not contractually committed. For multi-year contracts, ARR is the contract value divided by the term in years.Why it matters
Headline operating number that every other SaaS metric calibrates against — growth rate, efficiency ratios (CAC ratio, magic number, Rule of 40), retention math (NRR, GRR), and valuation multiples all read off ARR. Boards use the period-over-period ARR delta as the first-pass health check for the business.
How to interpret
Per KBCM/Sapphire SaaS Survey 2024 §Growth Rate, public-SaaS-comparable private companies in the $5–25M ARR band typically grow ARR 40–60% YoY, falling toward 20–30% by $100M+ ARR; well-below-band growth at any ARR scale is the first thing a board interrogates. Always read ARR alongside Net New ARR (sales.new_business + sales.expansion − sales.churn_arr − sales.downgrades) — flat ARR can mask churn offset by upsell.
Related KPIs
sales.carrsales.new_businesssales.expansionsales.churn_arrsales.downgradessales.growth_rate_yoysales.starting_arrcustomers.net_revenue_retentionoperations.rule_of_40
Source
SaaS Metrics Standards Board · section: ARR — published 2023-01-01.
Why does this cite SaaS Metrics Standards Board? Read the ontology methodology for the published vs editorial tier system, attribution rules, and dispute process.
Metric definitions reference standards published by the SaaS Metrics Standards Board (saasmetricsboard.com). imboard is not affiliated with, endorsed by, or a member of SMSB.
Stage relevance
| Company stage | Priority |
|---|---|
| Pre-Seed | Core |
| Seed | Core |
| Series A | Core |
| Series B | Core |
| Series C+ | Core |
| Public | Core |
Suggested for stages: Pre-Seed, Seed, Series A, Series B, Series C+, Public.
Default owning functions
- Finance
- Sales
Machine-readable
- This KPI as JSON:
/api/ontology/sales/arr.json - All Sales KPIs:
/api/ontology/sales.json - Full catalog:
/api/ontology/index.json
Sales KPIs
ARR, bookings, pipeline, deals, forecast. 10 industry-backed KPIs, each anchored to a third-party standard.
Average Contract Value
Average annualized contract value across new-customer deals signed during the period (ACV). Defines where the company plays on the SaaS deal-size spectrum and dictates the operating model — high-ACV businesses tolerate longer sales cycles and direct sales motions; low-ACV businesses must run product-led or inside-sales motions to keep CAC payback short. Common pitfall: blending new and expansion ACV obscures the new-logo deal-size trend that boards actually want to see. Anchored to KBCM/Sapphire SaaS Survey 2024 §Average Contract Value for cross-company benchmarking. — Sales KPI anchored to KBCM/Sapphire SaaS Survey 2024 (15th Annual).